The FCA has confirmed that UK financial regulation derived from EU legislation will remain in place until changed by the Government, but lawyers say a third of laws governing businesses are now up for grabs.
Experts say the EU financial services ‘passport’ could be lost, restricting the services that banks and financial services firms can sell outside the UK, and employment rights based on EU employment laws, such as TUPE, employee benefits, hiring workers from EU countries, could be repealed.
Competition law is also likely to be affected, meaning state aid and public procurement rules may no longer apply, making it easier for the UK government to intervene in business
Berwin Leighton Paisner partner Chris Bryant says businesses need to get their priorities fixed for an intense two-year lobbying period as Brexit is unravelled.
A statement from the FCA reads: “The FCA is in very close contact with the firms we supervise as well as the Treasury, the Bank of England and other UK authorities, and we are monitoring developments in the financial markets.
“Much financial regulation currently applicable in the UK derives from EU legislation. This regulation will remain applicable until any changes are made, which will be a matter for Government and Parliament.
“Firms must continue to abide by their obligations under UK law, including those derived from EU law and continue with implementation plans for legislation that is still to come into effect.
“Consumers’ rights and protections, including any derived from EU legislation, are unaffected by the result of the referendum and will remain unchanged unless and until the Government changes the applicable legislation.
“The longer term impacts of the decision to leave the EU on the overall regulatory framework for the UK will depend, in part, on the relationship that the UK seeks with the EU in the future. We will work closely with the Government as it confirms the arrangements for the UK’s future relationship with the EU.”
Bryant says: “This marks the biggest upheaval of our legal system in history – its scale simply cannot be underestimated. It covers everything from financial services to food labelling, from data protection to employment law. Tens of thousands of laws are now up for grabs. The job of deciding which laws to keep and which to abandon is too big for politicians to do unguided. Anyone doing business in the UK needs to assess their key pressure points and protect their interests.
“There is also no provision in place about what will happen to pending EU laws which are awaiting implementation, such as the General Data Protection Regulation. Businesses are facing years of uncertainty as they consider how they will continue to provide services and market products cross-border into the EU.
“Aside from the debate about when Article 50 of the European Treaty is triggered, Parliament will have to consider carefully how it deals with the thousands of EU Directives currently implemented in our domestic law. Does it preserve them all and chip away at them gradually, or does it address them in parallel to the Article 50 negotiations?
“British businesses urgently need to assess key pressure points and lobby the Government to protect their interests.”