FCA chief executive Andrew Bailey has played down reports of conflicts between the Treasury, Bank of England and other government departments over the City’s future Brexit strategy.
Reports last week suggested that the Bank of England feared that the Treasury would cede too much power in order to ensure financial firms maintain access to the European market, and that regulators would not have enough control over the City’s rules after Brexit.
Speaking to the Guardian, Bailey said there was actually widespread agreement that UK regulators and institutions should not become “rule-takers” after Brexit, even though open markets remained important across the EU.
Bailey says: “If you put [the FCA], the Bank of England and the Treasury into a room you would not find differences of view on basic planks of this. Do we believe in open markets? Yes. Do we think it is to the benefit of everybody, including the EU, that we have open markets? Yes. Are we concerned about what we could call ‘narrow’ rule-taking? Well, it would be a problem.
“But I think some of this is overblown. We can’t have automatic rule-taking and I don’t think any of us could be comfortable with that because Brussels rings you and tells you what the answer is. That is not a proposition any of us could live with. I don’t think there is a sliver of difference between us on that one.”
Bailey adds that it would be in the EU’s interest to agree to a “mutual recognition” deal over financial services, where equivalence in outcomes could be agreed even if domestic rules differed, because trade could gravitate to the City otherwise.
He says: “I’m always interested when I hear them say ‘We don’t like mutual recognition.’ I think you probably do want us to recognise you, actually.
“You will not get equivalent outcomes because we have different size markets…there would be a big incentive for business to move one way or another at that point.”