U.K. Seeks Views on Post-Brexit Regulation of Foreign Banks

With just a few months to go before Brexit takes effect, the U.K. Financial Conduct Authority started a consultation to look at the regulation of foreign banks.

The FCA said Wednesday that it expects an increase in foreign banks seeking U.K. authorization when the post-Brexit transition period expires at the end of this year. It also said that it will expect those companies to “have an active place of business in the U.K.”

“International firms serving U.K. customers through branches can sometimes create different risks of harm compared to U.K. firms because of the way their businesses are structured and operate,” the regulator said in a statement. “The FCA wants to hear views on how these risks can be mitigated, and when it would be appropriate for an international firm to seek authorization as a U.K.-incorporated firm.”

The consultation will take feedback until Nov. 27.

The FCA’s move “isn’t dissimilar to what the EU authorities are saying about outsourcing out of the EU,” said Peter Bevan, global head of the financial regulation group at Linklaters in London.

European Union lawmakers have repeatedly said they don’t want thinly-staffed “letterbox” entities inside the bloc to be a front for work being done from Britain after Brexit.

©2020 Bloomberg L.P.

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