FCA boss denies political pressure over letters to banks about Brexit

The head of the City watchdog has denied he was under political pressure to ask banks to slow down the pace of their Brexit relocation plans.

The FCA last week wrote to banks warning them to limit the number of clients they move from London to the European Union as a result of Britain’s departure from the trading bloc.

Andrew Bailey, the chief executive of the Financial Conduct Authority, said that the regulator wrote the letters to the heads of at least five banks “off our own initiative”.

Mr Bailey, speaking before the Treasury Committee, said: “I know we have been accused of being political here, but I don’t think we are. [What is written in the letters has] been entirely consistent with our objectives and statute to firms.

“We are aware there are some pressure on firms and there are discussions about what we might call ensuring there’s a critical mass of business moved over to a European Union entity that’s being created.”

We're underway. pic.twitter.com/z8S9DyxVJa

— Treasury Committee (@CommonsTreasury) December 3, 2018

He said that if UK-based firms are considering moving non-EU business from London, then they should “make those decisions in the interest of the client” in order to treat customers fairly.

In the letter, first reported by Financial News, the FCA said: “Clients should not be moved out of the UK until the FCA is satisfied that the relevant UK boards and/or senior managers have fully considered the impact of their firms’ proposals on every category of client, including whether their proposed changes are in each client’s best interests.”

One of the letters, signed by Megan Butler, head of supervision at the FCA, said that banks should “make the minimum necessary changes required” and that clients “should not be moved out of the UK until the FCA is satisfied” that the full impact has been considered.

The letter comes after lobby group Frankfurt Main Finance said that it expects 800 billion euro (£711 billion) of assets to move from London to Frankfurt as lenders prepare for Brexit.

Several London-based banks have indicated they will shift jobs to Frankfurt or other financial hubs in Paris and Dublin, which are also vying to take some of London’s business.