As such, underneath all the detail, it was the UK that was behind many initiatives intended to open up EU markets.
Post financial crisis, the EU itself now has an array of Europe-wide regulatory bodies including the European Securities and Markets Authority which is ostensibly leading on Mifid II.
The irony is that the power in the relationship may have been shifting a little just as we get divorced.
Infringement proceedings
And yet we look set to cohabit. A city lawyer says this is for very good reasons.
Helen Parsonage, a partner in the financial institutions group at law firm Osborne Clarke, says: “Until the UK completes the process of withdrawal from the EU, it remains subject to all of its obligations, including the obligation to transpose any new EU law.
“Technically, if the UK failed to implement new measures, the European Commission could start formal infringement proceedings which could eventually lead to a referral to the European Court of Justice.”
She says that is likely to still apply even following the Brexit date with many in the financial services industry seeing the transition as key.
“Even following exit, it is likely that the UK authorities will maintain the status quo in relation to rules affecting the financial services industry – principally to ensure a smooth and orderly exit.
“The sheer volume of legislation and curtailed timing means it would be impracticable for HM Treasury and the regulators to start considering amending the relevant regimes ahead of the exit deadline.”
“The financial services industry sees the negotiation of a transitional period as key – ensuring that EU law, as it applies in the UK, is converted into domestic law on the day we leave should aid those negotiations”.
She adds that the UK has international obligations that transcend the UK/EU relationship and that the UK may support many of the initiatives.
“A number of changes being introduced as part of the continuing post financial crisis reforms are required as a result of G20 commitments – the UK will still be bound by those commitments even once it leaves the EU.
“In addition, a number of changes that we see coming in through MiFID II and other initiatives, have been lobbied for quite hard by the UK regulators. As a result, it is unlikely that these would be removed once the UK is a third country,” Parsonage says.
Examination
For domestically focused portfolio advisers, who have no need or desire for access to EU markets, this may frustrate them.
But one forum may provide some answers soon. The House of Lords EU financial affairs sub committee plans to begin its hearings on Brexit and financial services next month.
It will examine the following:
- The scope for the UK to adapt its own regime to new circumstances post-Brexit and foster innovation, while still maintaining market access.
- Whether equivalence is the best means to achieve continued cooperation, and what other forms of alignment could exist and the differences between the UK, EU and international regimes in financial regulation and where gaps exist.
- Whether there are areas in which it could be beneficial for the UK to deviate from the EU’s current framework in future.
That may hold some answers for the post 2019 world at least. For now, as the arguments about Brexit swirl, we may have to keep calm and carry on with EU regulation for now.
