The chief executive of the FCA, Andrew Bailey, has stated EU free trade would be possible even without single market membership following the UK’s departure from the EU.
Bailey said that free trade restrictions were not “inevitable” following Brexit and that Britain does not require membership of the European single market to participate in free trade with the EU. He cited the agreement between the EU and the US on covered agreements, which he described as “ground-breaking”, as an example of the scope for international agreement to facilitate open financial markets.
Bailey commented that “open markets, freedom of location and free trade in financial services matter a lot and should be preserved”. Bailey also emphasised the importance of freedom of location to preserve public interest and promote consistency when dealing with regulatory outcomes to ensure a functioning global economy that encourages competition and reduces the cost of access. Bailey warned against taking freedom of location for granted, stating that “authorities should not dictate the location of firms; rather, we should allow open markets to shape those choices, always subject to our public interest objectives”.
The FCA’s work on Brexit is threefold: it involves giving technical advice to support the Government in its Brexit negotiations, working with authorised firms to understand plans for future cross-border operations into and out of the EU and, lastly, working with the Government on its repeal legislation, which involves line-by-line analysis of each piece of EU legislation and rule-making for which the FCA is the lead regulator. The FCA’s objective is to create a clear functioning regulatory regime that gives certainty to all interested parties.
In the coming years, commitment from the UK and EU will be crucial to avoid sacrificing free trade. Maintaining relationships and learning from effective structures already well-established in the EU and globally will be crucial to ensure the exchange of information on an open basis, ensuring transparency and confidence for the future.