The British Wealth Management Association has discounted the belief of some wealth managers that the UK's departure from the European Union will reduce the overall burden of regulation and legislation in financial services.

In a paper entitled "Brexit - how will it affect you?" it observes that the UK 'gold plates' EU financial regulation far more than  other EU country and that a good deal of EU regulation emanates from the UK in the first place, goes to Brussels for incorporation in legislation there and is then re-imported by the UK. The WMA does not discount the possibility that the EU will soon become less regulated than the UK without the UK proposing new EU-wide regulations.

Equivalence

The trade body is also concerned by something that it, or the EU, or both, calls "third country equivalence status." It states that the EU's new, overarching regulators (including the European Banking Authority, which is now looking for a new home after it moves away from London), will have to declare the UK's 'legislative environment' as 'equivalent' to the EU's in order for British firms to do business directly with clients located in the EU.

'Equivalence' is not reliant on the country in question having rulebooks that parrot those of the EU down to the last nicety and the Channel Islands have already induced the EU's various organs to declare them 'equivalent' in this regard, so the WMA does not think it a far-fetched aspiration for the UK. It states, however, that 'equivalence' is something for which a country has to apply and that the UK will not be able to apply for it until it has ceased to be a signatory to the EU treaties, after activating the famous Article 50 of the controversial Lisbon Treaty. Fast-track applications for 'equivalance' take two years.

The WMA laments the possibility that HM Government might try to circumvent this problem by mimicking EU rules long after it has left the EU without being able to influence them. In view of the UK's tendency to gold-plate legislation, however, that might turn out to be a good thing.