Out-Law News 1 min. read

BREXIT: Financial Times survey shows scale of asset managers' Brexit fears


UK asset managers do not expect to retain full 'passporting' rights enabling them to access the EU's single market once the Brexit process is complete, according to a new survey.

Of 644 asset management staff polled by PwC on behalf of the Financial Times last month, 70% expect that restrictions will be placed on their ability to trade with the single market. In addition, 85% of respondents believe it will be necessary for firms to relocate staff elsewhere in the EU as a result of Brexit, and 7% said that their employers had already begun doing so, the FT reported.

Just under one third of survey respondents said that their companies had not yet decided how to respond to the UK's decision to leave the EU, according to the FT.

Almost 5,500 UK financial firms currently rely on at least one regulatory 'passport' allowing them to market and sell their products throughout the European Economic Area (EEA), according to the latest figures from the Financial Conduct Authority (FCA). A further 8,000 firms based in the EU or EEA have been granted passports to market and sell their products in the UK.

Passporting arrangements enable firms based in one EU member state to trade anywhere in the bloc without having to seek multiple authorisations.

Financial regulation experts at Pinsent Masons, the law firm behind Out-Law.com, said previously that although the UK's exit from the EU was bound to have some effect on London's position as a market for international financial services, even the so-called 'hard Brexit' scenario would be unlikely to produce a sudden shift to another jurisdiction.

"London is likely to remain a major financial services centre - albeit with some additional fragmentation across other centres such as Frankfurt, Paris, Dublin and Luxembourg over time, subject to restrictions in infrastructure and levels of local expertise," financial regulation expert Elizabeth Budd said recently.

She added that regulatory 'equivalence', suggested by some as the answer to a hard Brexit, was "not a panacea that will provide a comprehensive regime".

"Although helpful, a process is required and it may not be able to replace more concrete measures such as local authorisation," she said.

"EU regulators will also want to ensure that operations in their jurisdictions have sufficient substantive presence, rather than simply plaques with the names of businesses attempting to operate entirely from London," she said.

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