* FCA's Bailey expects access based on regulatory
* Watchdog asks for more money to pay Brexit work costs
(Adds news conference)
By Huw Jones
LONDON, April 18 Access to markets and workers
in the European Union after Britain leaves the bloc is essential
for maintaining healthy competition in financial services and
avoiding disruption, the UK's markets watchdog said on Tuesday.
The Financial Conduct Authority (FCA) set out the key
principles for advising the government on EU withdrawal
negotiations in its annual business plan for next year, with
handling uncertainties surrounding Brexit a top priority.
"Open markets are an important enabler of healthy
competition, supporting FCA objectives," the watchdog said.
The regulator said the ability to recruit a diverse
workforce would also help to ensure that markets and firms are
well run and remain competitive - a nod to concerns at banks
that they may no longer be able to recruit freely from EU
countries in future.
FCA Chief Executive Andrew Bailey said the watchdog's Brexit
contingency plans included the possibility of no EU market
access, but noted that the government was looking to negotiate
for keeping markets open in a free trade agreement.
Some firms are already looking to move operations in case no
market access is negotiated.
"I start from the principle that firms, on the whole, don't
want to move operations. We ought to set up a system of open
markets where firms make these choices, not regulators and
governments," Bailey told reporters.
The FCA said Britain should seek to have a say over the
rules it applies. Regulators have said they do not want Britain
to become a "rule taker" in order to obtain EU market access,
meaning they must match the bloc's standards with equivalent
Bailey, however, said he expected financial market access to
be based on such a "regulatory equivalence" system, rather than
on adherence to global principles, which he would prefer.
Consistent global regulatory standards and cooperation
between national authorities will also be "fundamental
regardless of the outcomes of the negotiations", the FCA said.
As future market access remains unclear, some firms have
already decided to build up operations in the EU rather than
risk disruption to established customer links.
"This lack of clarity will potentially lead to a period of
prolonged uncertainty for markets, firms and consumers," the FCA
The watchdog, funded by levies on the firms it supervises,
said its total requirement for the financial year starting this
month was 526.9 million pounds ($663 million), up 1.5 percent or
7.6 million pounds on the previous year.
The increase is partly due to 2.5 million pounds extra
needed to handle Brexit, the watchdog said.
The costs will cover the "lift and shift" work of converting
EU financial law into workable UK rules, Bailey said.
The FCA also published its new "Mission", a 36-page document
that resets the regulator's core objectives as Bailey seeks to
draw a line under a string of mis-selling scandals spanning more
than two decades.
It seeks to strike a balance between demands from the 56,000
firms it supervises and finite resources, saying that protecting
the most vulnerable customers would be a priority rather than
trying to avoid "zero" firm failures.
($1 = 0.7944 pounds)
(Reporting by Huw Jones. Editing by Jane Merriman and Susan