Survey looks at UK financial services firms’ no-deal Brexit contingency planning
- Published: Wednesday, 07 August 2019 07:22
Nearly half (42 percent) of financial services firms say they will transfer UK business to a global centre outside the EU on day one in a no-deal Brexit scenario, with most choosing New York/US (13 percent) for this location. This is according to a survey by EY.
When asked to choose their top three issues in a no-deal situation, 29 percent chose contract continuity and jurisdictional controls followed by market volatility (20 percent) and capacity for heightened regulatory reporting (19 percent). Other issues were immigration considerations for UK and EU workforce (11 percent) and data transfer, also 11 percent.
Commenting on the polling results, John Liver, Financial Services Partner at EY, comments:
“Many firms have now established or built up presences where needed, but there is still a lot to do to ensure they can continue to serve clients smoothly and without disruption. Activity is now ramping up again as the new deadline looms.
“A number of legal, operational and market risks around a no-deal exit continue to concern the industry. The biggest worry in a no-deal exit is around contract continuity and jurisdictional controls. This reflects the fact that only in limited areas has Europe-wide action been taken to mitigate risks to contract continuity and therefore disruption to client services – firms are reliant on a patchwork of policies in individual countries, and need to understand and put in place controls to accommodate each individual country’s requirements.
“Market volatility was the next biggest issue for firms, as firms recognise that they need to be prepared both to manage potential impacts of real economy difficulties that could be caused by a no-deal exit, and choppy financial markets. This is followed by concerns over capacity for heightened regulatory reporting as firms deal with ever increasing regulatory scrutiny in their existing markets as well as dealing with new regulators as they build operations abroad.
“Whilst immigration considerations feature in the list of top concerns, we were surprised this issue does not have higher profile. Many firms are relying on people having roles in both the UK and their EU27 country and potential restrictions on the type of work that business travellers can do need to be considered carefully with red lines kicking in from day one across most of the EU27.”