LONDON (Reuters) - Britain’s financial regulator said on Wednesday that asset managers and mutual funds from the European Union would be allowed to continue operating in the UK after Brexit for a period of time even if there is no trade deal with the bloc.
The aim is to avoid a destabilising rupture in customer links if there is a “hard” Brexit, whereby no trade deal or transition period has been agreed between Britain and the EU by the time the UK leaves the EU in March 2019.
The Financial Conduct Authority (FCA) said the finance would, if necessary, legislate for a “temporary permissions” regime to roll over existing permissions at firms from elsewhere in the EU so they can continue operating in the UK from March 2019.
“This regime will enable relevant firms and funds to undertake new business within the scope of their permission, enable them to continue performing their contractual rights and obligations, manage existing business and mitigate risks associated with a sudden loss of permission,” the FCA said in a statement.
FCA Chief Executive Andrew Bailey has said a system of interim permissions is needed as the watchdog won’t have enough time before March 2019 to issue new authorisations for some 8,000 firms from elsewhere in the EU that sell funds, insurance and other investments in Britain.
The watchdog said more details would be made public in the new year.
FCA said the government has also decided that the watchdog will also become the regulator for UK-based trade repositories and credit rating agencies, two sectors that are currently regulated at EU level.
Separately on Wednesday, the Bank of England said branches of EU banks in London won’t have to become subsidiaries after Brexit, a costly exercise, as long as there remains close supervisory cooperation between UK and EU regulators.
Reporting by Huw Jones; Editing by Adrian Croft