FRANKFURT (Reuters) - Britain will have no choice but to stick with European Union banking laws when it leaves the bloc to avoid blowing a “huge hole” in its regulatory system, a financial industry lobbyist said on Thursday.
Graham Bishop, a pro-EU consultant and leading figure in a forum of financiers seeking to advise the British government in Brexit talks, said the country’s reliance on EU regulation would prove a major problem when it decides to leave.
“On the minute after midnight on the day we leave the EU, the regulations don’t apply. This would blow a huge hole in Britain’s regulatory system,” Bishop, who sits on the executive committee of the Financial Services Negotiation Forum, told an industry conference in Germany’s banking hub Frankfurt.
“If all these regulations don’t apply, the European Banking Authority’s rules and their technical standards... most of them, not all, fall away.”
Speaking to Reuters on the sidelines of the event, Bishop said the government would have to adopt European laws after Brexit because the sheer scale of the regulation meant it would take the government years to rewrite bespoke British laws.
“Then they have not taken control, so you are much worse off because now you are following (EU regulation) slavishly and you have no control over it,” Bishop said.
Bishop said rewriting the laws could also jeopardize banks’ “passporting” rights, which enable them to do business across the rest of the continent, if they were not viewed as equivalent with EU regulation.
Ratings firm Fitch said on Thursday that a worst-case withdrawal of passporting rights in isolation is unlikely to be a ratings changer for major UK banks and international banks with large operations in the UK.
Reporting by John Geddie; Editing by Mark Trevelyan