UK financial services firms could be stranded by Brexit

Hundreds of foreign financial services in Australia are at risk of finding themselves without valid licences after Brexit.

British Prime Minister Theresa May. Picture: AFP

Hundreds of foreign financial services operating in Australia are at risk of finding themselves without valid licences when Brexit goes through next month, the Australian Securities & Investments Commission has warned.

The corporate watchdog yesterday said there were 298 British firms operating in Australia, including 285 UK foreign financial services operating under financial services licences exemptions, which could be affected by regulatory changes post-Brexit.

ASIC commissioner Sean ­Hughes said it was up to firms with global operations to review their Australian Financial Services Licence arrangements as part of their broader preparations for Brexit.

“In view of the Brexit date of March 29, 2019, we expect firms to have adequate contingency measures to mitigate the potential implications of Brexit for their operations and importantly, to ensure they have in place appropriate AFS licensing arrangements to provide services in Australia,” Mr Hughes said.

While ASIC and other regulators have been working to prepare for the fallout from the UK’s withdrawal from the European Union, the efforts have been complicated by the ongoing uncertainty over the formal structure of the March 29 exit.

Mr Hughes said the watchdog’s contingency planning included a “no deal” scenario under which Britain leaves without any agreements in place with the EU.

“ASIC is well placed to manage the impacts arising in a ‘no deal’ scenario,” Mr Hughes said.

“We have been working closely with the UK’s financial regulators and our aim is to limit disruption to Australian financial services and our markets.”

Mr Hughes said ASIC would monitor developments post-Brexit “as intended and unintended consequences become apparent”.

Australian companies with operations in the UK have also been assessing the potential impact of Brexit on their businesses.

Australia’s major banks have all previously flagged the potential disruption to their UK businesses in the event of Brexit, with most well advanced in plans ­either to establish or bolster their Euro­pean offices outside London.

ASIC said it was working with the Reserve Bank of Australia and the Bank of England to ensure business continuity for “systemically important” Australian firms operating in Britain.

“ASIC has identified a small number of regulatory actions that will be needed and, as necessary, we envisage completing these steps ahead of the UK’s withdrawal from the EU in a ‘no deal’ scenario,” the watchdog said.

The watchdog also said it believed the Australian Securities Exchange would be able to continue to provide clearing services in the UK. It said the exchange had already notified the Bank of England that it wished to enter the UK central counterparts temporary recognition regime ­designed to allow non-UK companies to continue operating while they wait for authorisation from UK regulators.

The structure of Brexit remains uncertain just weeks out from the deadline.

The British parliament last month voted against the exit plan put forward by Prime Minister Theresa May, sparking conjecture the government may look to delay Brexit or negotiate a “softer” exit. Mrs May has insisted she will deliver Brexit on time.

Britain could leave the EU on March 29 without a deal in place in what many businesses have said would be a catastrophic development for the economy.

“My work is to deliver Brexit, to deliver it on time and I am going to be negotiating hard in the coming days to do just that,” Mrs May said on Thursday.