The European Union's securities watchdog has published guidance to stop national supervisors from competing unfairly with each other to woo financial firms in a post-Brexit rush from Britain. The EU's insurance watchdog is due to publish similar guidance to national watchdogs.
Dublin complained to Brussels that rival financial centers were offering a "back door" to the EU's single market through lax rules. In response to such concerns, the European Securities and Markets Authority (ESMA) said on Wednesday that national regulators need to prepare for greater demand for licenses as financial firms in Britain seek to relocate to an EU of 27 countries after Britain's departure in 2019.
"Firms need to be subject to the same standards of authorization and ongoing supervision across the EU27 to avoid competition on regulatory and supervisory practices between member states."
The guidance is non-binding but has the backing of ESMA's board, making it harder for a member state's regulator to ignore.
There should be "no automatic" recognition of authorizations granted by UK regulators, ESMA said.
This contrasts with the European Central Bank (ECB), which will accept UK authorisations for parts of a bank for a certain period to speed up licensing.
ESMA said that regulators should not authorise "letter box" entities that have few staff or operations. Outsourcing or delegation of operations to Britain should be allowed only "under strict conditions", it said, taking a similar stance to the ECB. "Market participants wishing to engage in outsourcing or delegation remain fully responsible for the tasks or functions that are outsourced or delegated," ESMA said.
We offer Insurance Firms advice and solutions in Compliance and Risk. From reviews and projects to regulatory authorisation and applications, our consultants are on hand to help you understand, identify and manage your regulatory requirements.
We specialise in delivering a bespoke recruitment service, with particular focus on Compliance, Risk and Audit roles. We offer a range of recruitment solutions covering: Permanent Hire, Contract and Consultancy placements.