The Financial Conduct Authority (FCA) has written to banks warning them about moving business away from the UK in a bid to combat the implications of Brexit.
Banks have been opening European subsidiaries and moving staff overseas to locations that will remain in the European Union (EU) once the UK has departed on 29 March 2019, such as Amsterdam, Frankfurt and Dublin. This will allow UK banks to continue servicing its European customers.
City A.M. reported that a spokesperson for the FCA yesterday confirmed that it had warned banks about their action in relation to Brexit, stating: “We have emphasised to firms that we expect decisions taken by them in relation to EU withdrawal to be consistent with our statutory objectives, which includes the interests of their clients.”
The letter, seen by Financial News and signed by FCA executive director Megan Butler, warned banks that transferring non-EU clients out of the UK could expose them to increased costs and new risks.
The letter read: “We are prepared to intervene where we see steps being taken which could expose clients or markets to unacceptable risks.”
It further urged that banks should only “make the minimum necessary changes required”, while clients “should not be moved out of the UK until the FCA is satisfied” that the companies in question have “fully considered the impact” of such plans.
Yesterday FCA director Andrew Bailey denied that the warning was driven by the current political landscape, telling the Treasury Select Committee the letter was “entirely consistent with our objectives and statute to firms.”
Bailey added: “We are aware there is some pressure on firms, and there are discussions about what we might call ensuring there’s a critical mass of business moved over to a European Union entity that’s being created.”
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