There are few signs of a mass exodus of financial institutions from the City of London because of the uncertainties surrounding the UK’s departure from the European Union, the City’s policy chief has said.

Future of financial services post-Brexit

Catherine McGuinness, chairman of the policy and resources committee, said that London was beginning to see “a little chink in the EU response, in that they do now seem to accept that financial services need specific dealing with”.Although at least five major banks based in London have stated they would be pressing ahead with contingency plans to establish post-Brexit European hubs in the likes of Frankfurt and Paris, Ms McGuinness said London was “not seeing any signs of a great Brexodus” with most institutions planning to keep the bulk of their staff in London.“The question is what they would need to have elsewhere in order to serve customers properly,” she said in an interview published online by BT.com on Tuesday. “And, of course, Europe – the EU – is trying to attract as many jobs as possible. We would be doing that in the same position.”Ms McGuinness said the latest Brussels guidelines for the Brexit negotiations reportedly included provision for “allowing appropriate access to financial services markets” and that this had provided some optimism for the financial services sector.“But,” she added, “we’ve got a lot of work to do to persuade them that what we’re proposing will, as we believe, work for the EU as well as the UK.”

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Making use of the Brexit transitional period

Her comments came as EU regulators continued to urge banks in Britain not to rely on a transition deal and, instead, submit licence applications for new EU hubs. UK Finance, which represents banks in Britain, said regulators must now use the transition to avoid insisting on such worst-case contingency planning. “Without political direction from leaders in the EU to their financial regulators instructing them to develop cross-border models of supervision and solutions to these cliff-edge issues, financial institutions and their customers may not be able to rely on these measures,” said Stephen Jones, chief executive of UK Finance.Ms McGuinness also said businesses should be honest with their customers about the difficulties they were likely to encounter as a result of Brexit.
“I don’t think that’s being political,” she said. “I think that saying Brexit is very difficult and there are real problems here and we need to sort out a sensible way isn’t necessarily being political, I think that’s the reality.“And I think it is useful when business tells us that’s the reality and it’s going to have these implications for customers.” 

Pushing forward with Brexit negotiations

Ms McGuinness said the Corporation of London was calling for a comprehensive free trade agreement with the EU that would cover financial services through mutual recognition – and not through equivalence arrangements, which would be determined by the EU and could be rescinded at short notice.While she said the recent transition agreement was positive for the City, Ms McGuinness said that too little has been achieved since Brexit talks began.“Two steps forward, one step back is a good way of putting it,” she said. “At the moment I do think we’ve made progress, it has been slow and it has been too slow, but I would say that, over the last few weeks, we’ve seen some real advances.”For related news and features, visit our Brexit section. Relocate’s new Global Mobility Toolkit provides free information, practical advice and support for HR, global mobility managers and global teams operating overseas.Access hundreds of global services and suppliers in our Online Directory 

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