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Watchdog considers 'interim' status for EU financial firms in UK

  • Britain's regulators could grant interim permission for EU investment and trading firms to continue operating in the U.K. after the country leaves the bloc
  • The FCA said there are 8,008 "passports" that allow firms from elsewhere in the EU to offer services in Britain, mainly insurance, trading and investment

Britain's regulators could grant interim permission for European Union investment and trading firms to continue operating in the U.K. after the country leaves the bloc in 2019.

Andrew Bailey, chief executive of the Financial Conduct Authority (FCA), said giving "interim permission" may be one solution for dealing initially with a wave of firms from the EU who need to continue offering services in Britain.

"We want what is practical and can be done," he told think tank OMFIF on Friday.

The FCA is responsible for authorizing investment and trading firms, and has said there are 8,008 "passports" that allow firms from elsewhere in the EU to offer services in Britain, mainly insurance, trading and investment.

"It gives you a pretty good measure of the scale of the task if some proportion of them want authorization," Bailey told reporters after the event.

Reauthorizing a big number of firms would not be practical with only 18 months to go before Britain leaves the bloc, and Bailey said a precedent for granting interim permission on a large scale had already been set.

The UK FCA will co-operate with Hong Kong’s SFC in enabling fintech firms to more easily access the respective financial services marketplaces.
Chris Ratcliffe | Bloomberg | Getty Images
The UK FCA will co-operate with Hong Kong’s SFC in enabling fintech firms to more easily access the respective financial services marketplaces.

The FCA did this for up to 30,000 thousand consumer credit firms in Britain when it took over responsibility for them.

"It would require a little bit of secondary legislation. But we very much take the view that you have got to have options."

The Bank of England, which authorizes banks and insurers, told Reuters this week it expects up to 130 license applications from such "inbound" firms, a huge administrative task with just 18 months to go before Brexit.

Bailey reiterated his plea to keep cross-border markets open and avoid protectionism after Brexit, saying that any agreement on market access should be clear and sustainable, and based on the principle of non-discrimination.

Regulators must work together to protect how markets function through greater information sharing in "colleges" of regulators from different countries, he added.