Problems of Legal Regulation of Financial Services in the Context of Brexit

Abstract

The financial services sector is an important contributor to the United Kingdoms (UKs) economy. The article discusses the main problems that arose in this sector as a result of Brexit. The European Union (EU)-UK Trade and Cooperation Agreement that was concluded as a result of Brexit does not contain special rules regarding financial services, thereby adding risks to the financial stability of the parties, while the existing international acts of soft law do not fill the existing gap. Consequently, the access of British financial services to the EU Common Market is possible only on the basis of recognition of the equivalence of the British regulatory regime to that of the EU. Meanwhile, such a decision has not yet been made and is unlikely to be made in the near future. Equivalence promotes the convergence of the two legal orders, providing a reduced uncertainty in the regulation of financial services. It was concluded that in the context of the goals of the UKs withdrawal from the EU and the intentions of the British government to return regulatory powers, the lack of a clear international legal mechanism for cooperation between the UK and EU in the field of financial services regulation will contribute to increasing divergence in legal regulation within both legal orders. This may also increase barriers to cross-border trade in financial services. The methodological bases of the work were the well-known general and particular methods of scientific research. The article aimed to study the relevant problems of legal regulation of financial services in the context of the UKs withdrawal from the EU, and identify general trends as well as the essential characteristics and main features in the field.