As Parliament debates Withdrawal Bill amendments, PIMFA reiterates call for three phase approach and one step Brexit.
In a statement just released, it said:
“Parliamentary debate about the Withdrawal Bill and amendments to it has raised again the issue of Deal vs No Deal.
“Decisions are at present a matter for Government and Parliament and PIMFA, the UK’s leading trade association for firms that provide investment management and financial advice, has no wish at this juncture to intervene. It has however repeatedly made it clear following the referendum that a ‘hard’ or ‘no deal’ Brexit would bring abrupt change and disruption to business flows and relationships that should be avoided.
“Adverse knock on effects could include lowering the value of sterling, at least in the short term, and consequentially the value of many of the assets held as savings and pensions by investors, while simultaneously raising costs to consumers as businesses readjust.
“Longer term effects could include the need to make further changes to accommodate a final agreement between the UK and EU. If so, this would mean 3 major sets of alterations to systems and approaches in a short time-frame when the substantial changes to accommodate MiFID II/R, PRIIPs, and other recently introduced regulations are taken into account. Continuing disruptive effects of this kind on business flows affect not only the firms but also the individuals, families, charities, pension funds, trusts and companies who are their clients.
“This kind of result should be avoided in the Brexit process. To do so, PIMFA has consistently advocated a 3-phase approach with a one-step Brexit. This means ensuring a proper transitional period close to the status quo and of at least two years’ duration after formal exit from the EU, with the final, phase 3 post-transition EU/UK agreement being known in advance to give firms time to adapt as required. There would in this scenario be only one major change, suitably far from the recent MiFID and other legislative changes to allow firms to have finalised those adjustments and amortise their costs. This would help to make further change manageable at low cost to clients. It would also generate greater market certainty and reduce volatility, thus mitigating the risk of adverse consequences of change for retail clients.
“In light of today’s debate and voting, PIMFA again reiterates the case for this approach to ensure that it features in current thinking, thus maximising the prospects of protecting retail investors, who are frequently the voters in whose interests Parliamentary and Governmental processes are intended to operate. A ‘no deal’ result would be contrary to such an outcome and strongly increase the risk of damage and detriment to business and consumer alike.”