LONDON (Reuters) – London’s future as a global financial centre is uncertain because of Brexit and Britain faces a tough task to secure European Union market access for its banks and insurers, a top UK regulator said on Wednesday as he steps down.
John Griffith-Jones, chair of the Financial Conduct Authority (FCA), said he believed London had successfully made the transition from a financial centre of necessity to a financial centre of choice.
“Little did we know then how this was about to be tested again by Brexit,” Griffith-Jones said in a speech to mark his departure after completing a five-year stint.
The FCA’s future after Britain leaves the European Union in March next year is all about maintaining a stable and respected position as a “tectonic plate” amongst many others, he said.
“But as we all know, we are not the only tectonic plate in town, and the all-too-adjacent grinding noise of politics bumping up against economics makes the long term outcome uncertain,” Griffith-Jones said.
His caution contrasts with pro-Brexit lawmakers who say that the City will flourish after Brexit and that the EU will be hit hard by cutting itself off from London.
French regulators see Brexit as an opportunity to encourage banks, insurers and asset managers in London to set up new EU bases in Paris. France’s finance minister said last week that Britain’s most important economic sector won’t get the bespoke deal it wants.
The EU, meanwhile, is trying to rush through reforms to build a more comprehensive financial market as it faces the loss of London.
“Very recently both the Prime Minister and the Chancellor have set out their views of what the country wants from the negotiations for the financial sector. I am sure we all wish them well in what will be a tough few months,” Griffith-Jones said.
He was the first chair of the FCA, a watchdog that replaced a Financial Services Authority tarnished by its failure to see the financial crisis coming. He had a rocky start, with senior lawmakers casting doubt on his suitability for the job.
The FCA was forced last month to give parliament a copy of its internal report into allegations that Royal Bank of Scotland mistreated business customers.
The watchdog had wanted to give a right of reply to those mentioned in the report first, but lawmakers have published it in full.
“A four-year legal process and a dense thicket of jurisprudential argument provide a far less attractive route to redress than the use of 24/7 media and the associated parliamentary support to pressurise the regulator to short circuit due process in contentious cases,” Griffith-Jones said.
Reporting by Huw Jones; Editing by Hugh Lawson