The Financial Conduct Authority (FCA) is planning to spend £30 million to help deal with the Brexit process. It will also have to scale down non-Brexit activities this year to ensure that bank operations are as smooth as possible.
The FCA believes that there could be tough times ahead for London banks and insurers as Brexit proceeds. There are many changes on the horizon as Britain exits from the EU and the FCA wants to be fully prepared. The financial watchdog has already said that it will be dropping non-critical projects so that it can further devote its resources to managing the potential chaos of Brexit.
Financial services based out of the UK are going to have problems since it currently serves as Europe's banking hub. Brexit could result in a lot of financial services moving out of the city of London which could be devastating to the UK economy as financial services contribute 7% to the national economy.
Leading banks that do business in London such as Goldman Sachs already have plans in place to transfer staff to Europe so as to deal with the consequence of Brexit. The FCA will have its hands full leading to Brexit and thereafter.
In a statement, Andrew Bailey, the chief executive of the FCA said
We recognize that this year we need to dedicate a significant amount of resource to withdrawal from the EU. As a result, setting our priorities this year has involved a particularly rigorous level of scrutiny and challenge to focus on areas where we see the greatest potential for harm
FCA To Consult With Government And Financial Firms
The FCA has decided to cut back on delaying, reducing and reprioritizing non-critical activity that is expected to bring in £14 million in funding. This means a number of activities that the FCA had committed to earlier this year, will now have to take a backseat as the FCA looks to work with the government and financial institutions that will be impacted the most from Brexit.
The other £16 million in funding will have to come from the FCA’s reserves and also from the consulting fees that it charges firms in the months to come. The FCA action plan as of now includes providing technical advice to the UK government and consulting with financial firms regarding their potential plans for the future and the impact they will have on the market.