Large international banks in the U.K. are calling on the government to allow the financial industry to remain subject to EU laws for up to five years after the country leaves the bloc, Reuters reported Dec. 9.
In a document submitted to the Treasury and seen by the newswire, the banks also push for the government to allow financial institutions to remain under the jurisdiction of the European Court of Justice as part of a transitional period.
The document, which was drafted by law firms on behalf of banks lobbying the government to negotiate a staggered exit from the EU over a number of years, presents the most detailed request yet by the industry for a transitional deal for financial institutions, Reuters noted. It warns of potential risks from a loss of significant financial services if the government is unable to secure a transitional period beyond the two-year Brexit negotiation period.
A transition period is necessary to "avoid potential damage to the 'real economy' that is reliant upon uninterrupted access to financial services," the banks say, arguing that such a period should last a minimum of three to five years. It also suggests that the European Court of Justice, which can override decisions by U.K. courts, will likely have to rule over any disagreements that may come up during the transition, Reuters noted.
The U.K.'s secretary of state for leaving the EU, David Davis, was reported Dec. 9 to have been cool on the idea of a transitional arrangement for the financial services industry, saying during a November meeting with the City of London Corporation that he was skeptical of threats that business would decamp for markets still within the EU.
The head of the Association of British Insurers also called for a transitional arrangement during the week of Dec. 5, saying at an event in Dublin that a government commitment to making an early transitional agreement would help "the firms most affected by Brexit not to take swift decisions in 2017 on scaling back U.K. operations."