(Press Association) The boss of Britain’s financial watchdog has called for a legally-binding transition agreement on Brexit to ensure the UK’s powerhouse financial sector can cope with any sudden loss of passporting rights.
Andrew Bailey, chief executive of the Financial Conduct Authority (FCA), said a transition period needed a “conditional commitment” on behalf of Britain and the EU to help guard against the risks posed by a halt to passporting or contract continuity.
While he said the EU’s view was that these financial risks only faced the UK, he said the nature of contract continuity meant both areas would be impacted if the UK embarked on a sudden exit.
Speaking to the House of Lords EU financial affairs sub-committee, he said: “I think that we have reached a point where it is necessary to have a transition period to allow us time to deal with those risks.
“That is the thing that I think needs to be sorted out PDQ (pretty darned quickly) as they say. I think there is an important issue coming up and I very much hope the reports we are hearing of the more optimistic noises from the December council are true.
“I have to say that I would not expect in any way that we will get a signed agreement on transition, but I do think that we need something that is legally binding us in the sense that it can be applied, and to do that I think it needs to be something like a conditional commitment on both sides, which ideally would be written into the conclusions of the council in December so we could take that forward.”
Transition period needed
Financial firms with headquarters in the City have been shifting jobs to finance hubs on the continent in anticipation of the loss of crucial EU trading rights.
Passporting rights allow banks to trade freely across the EU, but Britain looks set to lose access unless it agrees an equivalent regime when it exits the European single market.
Heavy-hitting US banks with offices in London, including JP Morgan and Goldman Sachs, are planning to spread staff across a number of European cities including Frankfurt.