1. The Compliance Facility Limited trading as The Compliance Foundation
Registered Address: The Old Casino, 28 Fourth Avenue, Hove, East Sussex, BN3 2PJ
Registered in England number 09763121
www.thecompliancefoundation.com info@thecompliancefoundation.com
No Brexit Bonfire of the Regulations – will the referendum bring
regulatory relief?
27th June 2016
Will Brexit bring a bonfire of the regulations? That’s what compliance strapped
firms are asking in the wake of Thursday’s referendum result.
The FCA’s statement on 24th June 2016 makes clear that existing requirements
apply until and unless there is Government change of applicable regulation.
But what prospect is there of the UK significantly streamlining the regulatory
regime when we detach from the EU?
TCF’s view would be, not much.
The UK has been the prime mover of a lot of financial services regulation and
legislation in the last 30 years. Or as some Brussels old hands will say, many of
the EU’s financial services requirements have been inspired, designed and
pushed by the UK. And it’s only relatively recently that the UK stopped taking
directives and writing in more detail into the UK’s legislation (in other words
gold plating the EU requirements with additional ones of their own).
On the banking prudential and capital side, much of the regulation stems from
the Basel Committee on Banking Supervision which sets global banking
standards which the EU has followed. Outside the EU, the UK would still need to
follow Basel requirements. Once again, the UK in the shape of the Bank of
England has been a key player in the existing framework so seeing them depart
from that seems unlikely.
Where it gets interesting is where recently, EU requirements have taken the form
of directly applicable Regulations. They apply direct to financial services firms.
This is rather than the usual process of a directive which has to be implemented
into national legislation and it is that local law which complies with EU
requirements which applies to you or me. Examples of these Regulations include
Capital Requirements Regulation for banks and investment firms, the Market
Abuse Regulation and the Markets in Financial Instruments Regulation.
The Compliance Foundation

2. The Compliance Facility Limited trading as The Compliance Foundation
Registered Address: The Old Casino, 28 Fourth Avenue, Hove, East Sussex, BN3 2PJ
Registered in England number 09763121
www.thecompliancefoundation.com info@thecompliancefoundation.com
The UK will come out of the EU. Politicians will have to determine whether it also
comes out of the single market – because staying in the single market will
inevitably mean having to continue to comply with the EU’s financial services
rules. If that happens then the Regulations would remain, and presumably future
Regulations would apply that the UK would have had no say in shaping.
But, if the UK comes out of the single market, while UK legislation compliant with
EU requirements would continue to apply until changed, these EU Regulations
could no longer apply - there would literally be a vaccuum. A vaccuum which
would need to be filled in some way by new UK legislation and rule making by
the FCA and PRA. In both instances, the UK will have to decide what its financial
services and regulatory compliance approach should be.
In our view, nobody should count on the UK authorities being less focused on
consumer protection and financial stability than they are now. Indeed given the
likely challenges of the next few years, they will probably be even more focused
on these areas than they are now.
So no bonfires of the regulations in prospect.