What does the Brexit trade deal mean for financial services?

The eleventh-hour Brexit trade deal might have been welcome news for some sectors but financial services – which contributes £130 billion to the UK economy and employs more than a million people – is conspicuous by its absence.

Talks are due to get underway to create a ‘forum for regulatory co-operation’ by March before the real negotiations begin. The European Commission's financial services commissioner, Mairead McGuinness, has suggested a future arrangement could take the form of the “voluntary structure” the EU has with the US to “compare regulatory initiatives, exchange views on international developments and discuss equivalence related issues.”

Assuming an agreement can be reached, UK firms trading with the EU have little choice but to navigate what has been described as ‘a patchwork of individual EU nations’ regulations’ until then.

Any firm in financial services can be impacted by the lack of certainty, of course, but investment regulation changes are a particular cause for concern.

From June, EU member states will need to comply with Investment Firm Regulation and the Investment Firm Directive (IFR/IFD). And while the FCA’s Investment Firms Prudential Regulation (IFPR) was expected to offer a comparable framework, it is expected to be introduced six months later, which could lead to a headache for some firms.

As Stuart Murdoch, from our training partner, the Financial Services Training Provider (FSTP) puts it, “With the EU still not granting regulatory equivalence, and the UK government unwilling to give up sovereignty in this area, we are still in for the long haul.”

Not every financial services firm does business in the EEA but it’s important to note the FCA’s list of questions to help you establish whether you’re affected by the end of the transition period. Have you, for instance, provided financial advice to customers living there, or do you transfer data between the UK and EEA?

Some EU regulation, notably GDPR, is enshrined in UK law, so the training you’ve undertaken on it is still relevant, especially if you also work in countries where the EU GDPR applies. 

Of course, the end of the transition period means changes for some customers, and the FCA expects firms to communicate with them ‘in a way which is clear, fair and not misleading’. Some will need to inform customers in the EEA that payments and cash withdrawals could take longer and be more expensive, or that their account will be closed.

All this can make it difficult to plan learning and development programmes for the coming year, especially with workforces continuing to operate remotely due to Covid-19.

There is no question that firms must keep their finger on the pulse in the coming months and years, as new agreements are put in place. Then they need a system in place to roll out relevant training to the right people in a timely way. A good way to achieve this is through eLearning, especially when staff (including new starters) are working from home.

With the right platform, compliance and L&D teams have access to powerful reporting tools, which highlight areas of potential risk. Working with accredited partners to ensure content is engaging and up-to-date is also key – ours include UK Finance, Chartered Insurance Institute (CII), Investment Association (IA) and the Financial Services Training Partners (FSTP).

At a time when firms will have to be nimble, an off-the-shelf solution can do much of the heavy lifting and enable staff to meet the new regulatory requirements.

Find out more about Access Learning Solutions for firms including a library of governance, risk and compliance courses and award-winning learning management system.

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