TISA: finance industry can "thrive" without passporting rights

TISA says the savings and investment industry "can thrive outside the European Union" and has outlined recommendations that are not dependent on firms having ‘passport’ rights and do not require the free movement of people.

Related topics:  Savings & Investments
Rozi Jones
5th October 2016
EU flags Brexit Europe
"This is a win-win opportunity. Many of the EU Directives, like AIFMD and MiFID II, already embody the concept and through enabling legislation it can be added to others, such as UCITs."

TISA has submitted its initial proposals to HM Treasury, with its key recommendations assuming that the UK will not be part of the single market.

This, according to TISA, "should not be an insurmountable problem for the savings and investment industry, provided that the Government targets what the EU calls 'third country equivalence' in its negotiations through one piece of enabling legislation".

It believes this would enable a reciprocal arrangement to be enacted for the 8,000 EU firms that are doing business within the UK today.

Industry experts such as the IFS and Chairman of the Treasury Committee, Andrew Tyrie, have previously raised concerns over the UK leaving the single market.

Tyrie believes that "the business put at risk could be significant", adding that none of the current off-the-shelf arrangements can preserve existing passporting arrangements, while giving the UK the influence and control it needs over financial services regulation as it develops.

He said that "efforts to secure an appropriate arrangement for UK-based firms will be one of the most challenging aspects of the negotiations about the UK’s future relationship with the EU".

TISA instead says that losing single market access will create an opportunity to create a more streamlined regulatory framework focused on the needs of consumers.

TISA suggests an “EU equivalent” rulebook for those firms or their subsidiaries that want access to trade financial services within the EU. Then a simpler tier of rules for everyone else, cutting away red tape from those firms that only want to service UK consumers.

TISA added that "the development of a well-regulated market that is appropriate for the world outside of the EU" could attract more global, non-EU financial services to the UK.

TISA's Director General David Dalton-Brown said: “Our aim should be full recognition that the UK has third country equivalent status for its regulatory framework with the EU.

“This is a win-win opportunity. Many of the EU Directives, like AIFMD and MiFID II, already embody the concept and through enabling legislation it can be added to others, such as UCITs. This would facilitate the continuation of existing business, with minimal impact for the 113,000 UK jobs dependent upon trade with the EU and the 8,000 EU financial services that are trading inside the UK today.

“Government should task the FCA to commence work immediately on a domestic only version of the regulatory rulebook. This should focus on cutting away most of the paperwork that consumers are expected to wade through to open a savings and investments account.

“We also need to dramatically speed up the process for authorising new market participants. It’s disappointing that many new authorisations for firms take so long and we can see other financial centres looking to attract business – and the UK’s growing FinTech community - from the UK by offering attractive authorisation and support services.”

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