The Committee will examine what the Government’s financial services priorities should be when it negotiates the UK’s future trading relationship with the EU and third countries, according to a statement on the Treasury website.
Commenting on the launch of the inquiry, Rt Hon. Nicky Morgan MP, Chair of the Treasury Committee, said: “Brexit will have a significant and long-lasting impact on the financial services sector, including the insurance, retail banking and asset management sectors, in the UK, the EU, and potentially the rest of the world.
“The UK may converge, seek equivalence, or diverge from the EU. As part of our new inquiry, the Treasury Committee will examine the risks and rewards of each of these choices.
“We’ll also explore the opportunities outside Brexit, such as fintech, on which we should be capitalising.”
“After we’ve taken evidence from industry, regulators, ministers and officials, we’ll make a series of recommendations to the Government and regulators about what it should prioritise in negotiations with the EU and the rest of the world.”
The inquiry will also look at how the UK’s financial services sector can take advantage of the UK’s new trading environment with the rest of the world, and whether the UK should maintain the current regulatory barriers that apply to third countries.
Tom McPhail, head of policy at UK investment firm Hargreaves Lansdown said: “Much of the UK’s financial regulation has evolved under the canopy of European institutions. We’re entering uncharted waters, in terms of how our regulation is structured and what we want it to do, so this is a welcome and timely inquiry.
“UK investors are well protected by existing safeguards but that doesn’t mean things can’t be done better or that we can’t find opportunities for UK financial companies to grow in new directions. We’re particularly interested to look at regulations around how investors are informed about the costs, risks and benefits of financial products and whether these can be improved; it is vital customers are well-protected but it is also essential the system of protections encourages them to save and invest for their future with confidence.”
UK investors are finding it difficult to remain calm in the run up to March 29. But Rick Smith, the managing director of Forbes Burton says it’s necessary: “Avoid risks, cut controllable costs, keep an eye on the competition, conduct a rigorous internal review and strengthen any current relationships with customers and suppliers. Whichever way the deal goes, Brexit is set to have an impact on businesses – addressing the situation head on is key to survival. Keep researching and don’t be afraid to seek advice.”
If UK investors are panicking, so are financial advice firms who are worried about access to retail clients in the EU when the UK leaves, according to the chief executive of industry body Personal Investment Management and Financial Advice Association (Pimfa).
Pimfa chief executive John Barrass expressed his views in a recent interview to Portfolio Adviser.
Barrass said: “The key thing for us on this is that it doesn’t matter to the firms whether there is a deal or no deal because the effect is exactly the same in respect of the timing. We don’t have in the retail sector the equivalent provisions within the relevant laws on how you access retail clients for investment purposes.
“We will be telling the committee that the transition period is much preferable as it gives more time for firms. We also will ask what they are aiming for – the duration and mitigation with clients in the EU. The critical point for us is we want time.”
Sabuhi Gard is an investment writer at Incisive Works
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