The UK leaving the European Union will not mean UK financial services firms will escape the heavy burden of regulation, despite Mifid II rules no longer applying, one regulation expert has warned.
Simon Crown, a partner and Mifid specialist at global law firm Clifford Chance, says if a Brexit occurs the UK could be set back as it will lose its ability to form regulation and negotiate new regulation.
He says: “What the Brexit doesn’t mean is that the UK would suddenly be able to lighten its regulatory regime and the reason for that is if UK firms wanted to be able to access the European market then one of the basic requirements of that is going to be having equivalents of UK regulation.”
However, he says: “The problem is not being a EU member anymore you are not there when it is drafted, you can’t come up with ideas and you can’t negotiate.”
Crown says the UK will have to keep up with European law in the same way as non-EU countries such as Switzerland and Norway have to at the moment.
He says:“A lot of Mifid II rules, including fund charges, are already rooted in UK regulation, so we won’t escape those.
“Is it not right to say the UK has the right to lighten the regulation in the UK. If you look back over the past four years, some of the conflict in Europe has been about the UK wanting to apply tougher regulation, particularly with banks. That put UK banks in a competitive advantage to some European banks.”
Earlier this year, the European Commission extended the deadline by 12 months for member states to comply with Mifid II due to the “exceptional” challenges firms and regulators face in preparing for the new rules.