On 29 October 2019, the FCA published a speech (delivered on 28 October) by Nausicaa Delfas, FCA Executive Director of International, on the future of financial services regulation in the UK.
Ms Delfas begins her speech discussing preparations for Brexit, noting that the FCA has undertaken extensive preparations geared towards a no-deal exit, and has provided extensive guidance for firms. The result of which is that the Financial Policy Committee has concluded that the UK financial system can handle a disorderly Brexit. In terms of its European counterparts, the FCA welcomes the steps taken to mitigate disruption, however Ms Delfas reiterates the various issues that remain, as set out by Andrew Bailey, FCA Chief Executive, in an earlier speech (our blog is here). Notably, these issues are the Share Trading Obligation, the Derivatives Trading Obligation, clearing, uncleared derivatives, data exchange, contract repapering and retail financial services preparation.
Ms Delfas then moves on to discuss the UK’s future relationship with Europe, highlighting that the onshoring of EU legislation will mean that when the UK leaves the EU, it will have identical rulebooks. This makes the UK regime the most equivalent in the world to the EU.
Ms Delfas also remarks that regardless where the EU and UK end up, the FCA will continue to engage with the future EU agenda not only because the rulebooks start from the same place, but also because of shared common regulatory priorities, challenges and concerns.
Ms Delfas reiterates the FCA’s position on equivalence stating in the future the FCA expects both jurisdictions to be able to find each other equivalent on an outcomes basis rather than line by line regulatory alignment, respecting the autonomy of one another’s rulemaking. In particular she states that the FCA “believe that equivalence decisions should be based on technical assessments. They should not be political.”
When discussing international engagement, Ms Dalfas makes the point that the FCA will continue, and even increase, its activity in support of the development of sound international standards, rooted in strong regulatory cooperation.
In the final part of her speech, Ms Delfas covers the FCA’s future approach to regulation. Among other things she mentions that the FCA is “working closely with HM Treasury to explore options for enhancing its regulatory cooperation with key jurisdictions post-exit, and new mechanisms for market access. This includes supporting the Government as it develops its position on trade.”