Banks told to prepare for hard Brexit
Britain's banks and insurers must plan for a "hard" Brexit in case a transition period is not in place next March, a senior British regulator said.
"With eight months until we exit the European Union in March 2019, it is important we all -- regulators and industry -- continue to plan for a range of scenarios," said Nausicaa Delfas, head of international strategy at the Financial Conduct Authority.
"Across the FCA, together with colleagues from the Bank of England and the government, we have been working to develop a number of safeguards and contingencies, in the event of a hard Brexit, to ensure that 'day 1' works smoothly," Delfas told an event held by TheCityUK.
Britain and the EU have agreed on a transition deal bridging Brexit in March next year and the end of 2020, but it has yet to be ratified, meaning financial firms based in Britain could face an abrupt end to EU market access.
EU banking, insurance and markets watchdogs have already warned their respective sectors to be ready for a hard Brexit. The bloc's executive European Commission told EU states on Thursday to "intensify preparedness" for a potentially disruptive Brexit.
Britain has said it and the EU should act to ensure that cross-border financial contracts like derivatives and insurance policies can still be serviced after March, but the EU reiterated on Thursday that it won't legislate for now.
"In relation to contracts, at this juncture, there does not appear to be an issue of a general nature linked to contract continuity as in principle, even after withdrawal, the performance of existing obligations can continue," the European Commission said on Thursday.
It is unclear what sort of EU market access financial firms in Britain will have after the transition period ends, prompting many banks and insurers to have new hubs up and running in the bloc by next March to avoid potential disruption.
A group of eight EU states also called for a redoubling of efforts to build a capital markets union in the bloc to provide "stable and cost-effective" funding for EU companies, given that Britain, Europe's biggest financial centre, is leaving.
Published: by Radio NewsHub