April 18, 2017 / 8:00 AM / 3 years ago

Britain's finance watchdog says EU access vital for healthy competition

LONDON, April 18 (Reuters) - Access to European Union markets and people after Britain leaves the bloc is essential for maintaining healthy competition in financial services, the country’s markets watchdog said on Tuesday.

The Financial Conduct Authority (FCA) set out the key principles for advising the government on EU withdrawal negotiations in its annual business plan for next year, with handling uncertainties surrounding Brexit a top priority.

“Open markets are an important enabler of healthy competition, supporting FCA objectives,” the watchdog said.

The regulator said the ability to recruit a diverse workforce would also help to ensure that markets and firms are well run and remain competitive - a nod to concerns at banks that they may no longer be able to recruit freely from EU countries in future.

Consistent global regulatory standards and cooperation between national authorities will also be “fundamental regardless of the outcomes of the negotiations.”

The FCA said Britain should also have a say over the rules it applies. Regulators have said they do not want Britain to become a “rule taker” in order to obtain EU market access, meaning they must match the bloc’s standards.

It remains unclear if banks and other financial firms in Britain will have access to EU markets after Brexit. Some companies have decided to build up operations in the EU rather than risk disruption to established customer links.

“This lack of clarity will potentially lead to a period of prolonged uncertainty for markets, firms and consumers,” the FCA said.

The watchdog, funded by levies on the firms it supervises, said its total requirement for financial the year starting this month was 526.9 million pounds ($663.26 million), up 1.5 percent or 7.6 million pounds on the previous year.

The increase is partly due to 2.5 million pounds extra needed to handle Brexit, the watchdog said.

The FCA also published its new “Mission”, a 36-page document that resets the regulator’s core objectives as new chief executive, Andrew Bailey, seeks to draw a line under a string a mis-selling scandals spanning more than two decades.

The Mission, in line with a draft version that was put out to public consultation, seeks to strike a balance between demands and finite resources, saying that protecting the most vulnerable customers would be a priority.

“The Mission gives firms and consumers greater clarity about how and why we prioritise, protect and intervene in financial markets,” Bailey said in a statement.

It is being made clearer, for example, that when a firm or individual is referred to enforcement, this does not mean that the watchdog already believes wrongdoing has taken place.

The watchdog also published for the first time documents that set out its internal thinking on key parts of the financial industry.

It will also launch a strategic review of retail banking business models in the year ahead, look at the motor finance industry, review pricing practices in general insurance, assess “robo” or automated advice models,

$1 = 0.7944 pounds Reporting by Huw Jones. Editing by Jane Merriman

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