Finance firms should not be forced by regulators to change location after Britain leaves the European Union in 2019, Andrew Bailey, chief executive of the UK’s Financial Conduct Authority told a Reuters Newsmaker event on Thursday.
Banks, insurers and asset managers based in Britain are already making contingency plans to shift some operations to continental Europe after Brexit takes effect in case access to the EU single market is closed off.
But Bailey said Britain and the EU are in a position to preserve free trade for financial services, meaning such moves need not happen.
“Firms should be able to take their own decisions on where they locate, subject to appropriate regulatory arrangements being in place which preserve the public interest,” Bailey said, in his first major speech on Brexit since Britain triggered the formal EU divorce proceedings in March.
“Authorities should not dictate the location of firms,” he told an audience in Canary Wharf, home to some of the world’s biggest banks.
Future financial sector relations between Britain and the EU should be based on “mutual recognition” or regulatory cooperation “but not exact mirroring” of rules, Bailey said.
Frankfurt, Paris, Amsterdam, Luxembourg and Dublin are all vying for a slice of Britain’s financial services industry after Brexit. Bailey said such competition was good.
But he also said Brexit should not be used as an excuse to restrict the ability to have open markets and freedom of location.
“The roots exist to come out with sensible outcomes on this.”
Some companies have already announced plans to move people to continental European locations to retain access to the EU single market. Bailey said a transition period based on current trading arrangements was needed this year.
This would avoid a “regrettable” situation whereby firms had to “press the button” on moves to the EU before they know what the outcome of Britain’s negotiations with the bloc will be.