Brexit talks period will not give City firms enough time to reorganise - report

The two year Brexit negotiation period will not be enough time for financial firms to reorganise themselves in an orderly way, according a report published on Monday.

Legal firm Freshfields said instead a “longer and phased implementation period” would be mutually beneficial to the UK and EU.

The report, which was commissioned by the lobby group TheCityUK, said uncertainty around Brexit negotiations was forcing firms to make contingency plans based on a ‘worst case’ scenario that no equivalence, passporting rights or other access regimes will be in place before the expiry of the two-year negotiation period.

For some firms, these contingency plans include relocating some EU-client facing services to Europe. For others, they will involve adopting alternative strategies and other forms of business organisation, it added.

The report additionally highlights areas of particular industry focus, including maintaining flexibility in cross-border employment rights and rights of residence; the security and cross-border transfer of data; access to and continuity of service provision by market infrastructure; and mutual recognition of professional qualifications.

“The legal impact of Brexit on the UK-based financial services sector is clearly of great importance globally. This report attempts to identify what areas of financial services business stand to be impacted the most by Brexit and may help to inform firms’ strategic solutions as the UK-EU negotiations begin,” Freshfields partner James Smethurst said.

TheCityUK chief Miles Celic, said: “The primary objective for our industry through Brexit - and beyond - is continuity of service provision for customers and clients."

"This can best be delivered through a bespoke arrangement based on mutual market access and mutual regulatory recognition and cooperation. There should also be appropriate bridging and adaptation periods, with clarity on this early in the negotiations."

“The UK-based financial and related professional services industry has long been a driver of growth and job creation on both sides of the Channel. It is in our common interest that this role is not just preserved, but promoted".