Brexit: what are the options for the financial services industry?

Abstract

Purpose To explain the impact for financial services firms of the UK’s vote to leave the European Union (EU) and to assess the possible options for conducting cross-border financial services between the UK and EU in the future. Key to this is the likely loss of the EU “passport” for financial services that allows a firm licensed in one EU state to offer its services freely throughout all EU states. Design/methodology/approach Explains the process by which the UK will leave the EU and negotiate future trading arrangements; the key considerations for financial services firms doing cross-border business in the EU; the various options for cross-border business in the future; and the key steps financial services firms should be taking to respond to the vote to leave the EU. Findings Many issues still remain uncertain and are unlikely to be resolved for a number of years, but long lead times to implement solutions mean that firms should be considering their options now. Practical implications Firms should be evaluating their current reliance on EU passports and the alternative options that might be suited to their business, such as the “quasi-passports” available under certain specific EU laws or relocation of part or all of their business. Originality/value Legal analysis and practical guidance concerning an unprecedented political development with profound impacts on financial services in Europe, by experts with long-term experience of EU negotiations and financial services gained from working for the British government, regulators and regulated firms.