FCA letter reveals 5,500 UK firms rely on passporting

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Correspondence between the FCA and the Treasury committee reveals that 5,500 individual UK financial services firms hold at least one passport to do business in the European Union.

Figures released by the Treasury select committee today show that in total UK firms hold more than 330,000 passports.

In the EU and EEA, 8,000 firms hold passports for doing business in the UK. However, the total number of inbound passports was much less at 23,500.

In the letter, dated 17 August, but only released today, FCA chief executive Andrew Bailey says his teams will release “comprehensive responses” in September regarding the regulation of financial services.

UK firms primarily sought passports under Mifid and the Insurance Mediation Directive (IMD), while EU firms overwhelming sought passports under the IMD, with 5,700 firms using a passport issued under this directive.

Treasury committee chairman Andrew Tyrie says the figures show that “business put at risk could be significant” if passporting is impacted by Brexit negotiations.

“None of the current off-the-shelf arrangements can preserve existing passporting arrangements, while giving the UK the influence and control it needs over financial services regulation as it develops.”

Tyrie says securing an arrangement for UK financial services will be “one of the most challenging aspects of the negotiations about the UK’s future relationship with the EU”.

“This issue needs to be right at the top of the in-trays of the Chancellor, the Governor of the Bank of England, and the UK’s lead negotiators.”