A report this week suggested that the Financial Conduct Authority is looking to boost its overseas influence.
Currently, the UK regulator only has powers over financial services firms operating in the UK. But, according to minutes of a board meeting held in July, cited in an article on the New Model Adviser website, the Authority is keen to extend its influence.
‘Consideration should be given to the FCA bolstering its international engagement activity with a view to influence global standards more intensively,’ the minutes stated.
How will Brexit impact FCA regulation?
As the terms of the UK’s exit from the EU are yet undefined, it’s not clear how financial services firms and their regulation will be affected.
But if a ‘hard Brexit’ is pursued, as Prime Minister Theresa May suggested recently, the UK would exit the single market.
This would require the UK to establish separate trade agreements with individual countries around the world. And would require financial firms to agree to local regulations set by the countries they want to trade in.
The day after the referendum, the Authority stated that the decision to leave the EU would have ‘significant implications’. Since then, it has set up a special unit – the EU & Global Department – to plan for the UK’s exit.
What does this mean for UK financial services firms?
Currently, very little. The FCA has made it clear that it is ‘business as usual’ as regards the implementation of, and compliance with, EU-wide regulation.
This includes the roll-out of MiFIDII. Launching the regulator’s third consultation paper on MiFIDII last month, chief executive Andrew Bailey reiterated that firms need to ‘continue to abide by their obligations under UK law including those derived from EU law. They must continue with implementation plans for legislation that is still to come into effect, of which MiFID II is one such example.’
Ultimately, for multinational firms that have to comply with a range of legislative bodies, an increased remit for the FCA may not be a bad thing – potentially limiting the number of regulators firms need to work with.
As with many things following the referendum result, the full impact isn’t yet known. Watch this space for the FCA’s next moves!
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