Nobody truly knows what post-Brexit Britain is going to be like. Which ever way the decision goes, the financial services sector in the UK is likely to undergo some drastic changes.
Brexit - one of the only words on the lips of banking and financial services specialists within the City of late, especially within the regulatory space and I think we can all see why.
The UK still has the largest financial centre in the European Union, well for the time being anyway. London has the largest variety of financial services firms in the EU, with a plethora of national, international and global banks, as well as other financial institutions strongly embedded in the City. The majority of non-EU financial services firms use London and the UK as a hub to reach markets and clients across the EU.
At the moment, a large part of it is: we will just have to wait and see. It will be down to the arrangements put in place whilst the negotiations are ongoing between the UK and the remainder of the EU.
For many years the regulatory market in the UK and EU has been driven and regulated by a single rule book, which is made up of numerous directives and regulatory standards. This allows cross border activity to occur without further ‘so called’ authorisation. Whilst this is still the case, a large number of financial services firms operate on a global basis and therefore operate through global level regulations and incentives. So Brexit will not only have an impact on the EU regulations, but those wider global initiatives as well.
If we decide to leave the EU, then a whole new regulatory framework will have to change. We will have the ability and freedom to regulate our very own financial services market. If we do decide to leave, there is more than likely going to be a transition period of up to 2 or 3 years, in which time we will have to determine which EU laws we will have to abide by, take forward and adapt accordingly.
Where we will have to continue working under certain regulations, it will be interesting to see what and whether we can have an impact on financial regulations and whether our voice will be listened to. Over the last number of years, we have played a somewhat lead or pivotal role in regulatory change (MiFID II, MAR etc.) and their influences on the market.
Will we have a voice, or at least some voice, in future regulatory changes which affect the financial services market?
This won’t affect all businesses as much as we think. For example, British based firms with British based client basis will not have to worry as much about Brexit but more about the UK government decisions and who is running the country and the decisions they implement. This will be the largest factor affecting business.
We won’t see the death of the UK market by any means; we may just see a few changes to it. Also, unfortunately for most, there is likely to be a delay before we see continuity in the market again. If we do decide to leave the EU, we anticipate a significant increase in hiring activity. This will be in order to help create and embed new regulatory frameworks driven by our new UK regulatory manual. We will probably see more advisory roles become available for the majority of firms, whilst monitoring will likely be the last thing the larger firms look at.
As my colleague Hakan Enver states “You can’t keep London down” - I couldn’t agree more with this statement. Opportunity is right in front of us, and over the coming months and years, both compliance and regulation will continue to be at the forefront of the market.
For the time being, it is safe to say uncertainty will continue. Compliance professionals will remain reluctant to move jobs, thus failing to generate new positions and growth opportunities for others, and businesses continue to put off all but essential hiring.