By Aliyu DANLADI
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 on Thursday in a warning echoed by Brussels.
Nausicaa Delfas, Head of International Strategy at the Financial Conduct Authority (FCA) gave the warning at an event held by TheCityUK in London.
“With eight months until we exit the European Union in March, it is important we all-regulators and industry-continue to plan for a range of scenarios.
“Across the FCA, together with colleagues from the Bank of England I 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 said.
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 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.
It is unclear what sort of EU market access financial firms in Britain will have after the transition period ends.
This has prompted many banks and insurers to have new hubs up and running in the bloc by next March to avoid potential disruption.
