Bankers urge move to avert Brexit 'cliff-edge'

A new‎ parliamentary sub-committee should be created to accelerate scrutiny of European legislation ahead of Brexit in a bid to avert a regulatory vacuum in the banking sector, an influential City lobbying group will warn this week.

Sky News has obtained a submission by the British Bankers' Association (BBA) to a House of Lords inquiry‎‎ into the legislative implications of Brexit, which demands that legislation "that is complex and important to market stability should be prioritised".

The Lords Constitutional Affairs Committee is investigating the process of transposing nearly half a century of EU laws into UK legislation as part of the Great Repeal Bill announced by Theresa May last autumn.

In its submission, which largely consists‎ of technical advice, the BBA calls for the creation of a parliamentary Brexit sub-committee, alongside an upgrading of the resources available to existing panels of Peers involved in the regulatory and legislative reform.

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"To avoid market disruption and allow sufficient time for compliance and amendments to systems and processes, any delegated legislation must be passed and made public in good time - ie well ahead of the date of Brexit itself," the BBA document says.

The banking lobby group's contribution to the debate about the transposition of EU law into UK law follows warnings by lawyers and City figures about a "cliff-edge" if appropriate provisions are not put in place ahead of Brexit.

"The biggest fear for banks is that we have two years to implement 46 years of EU regulation and if it isn't done, there will be a regulatory vacuum and it will be unclear about how we can serve our customers and clients," said one banking industry source.

"Any trade deal will also take into consideration how the UK qualifies as 'equivalent' under current law - if the law has changed we lose that ability to make the point that our regimes are compatible with other EU countries."

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The Prime Minister said earlier this month that the UK would leave the EU single market, leading many big banks and other City employers to push for a deal based on 'equivalence', which would enable British companies to be free to operate on similar terms to their European counterparts.

Uncertainty over the practicality of such an arrangement, or the willingness of the remaining EU member states to grant such access to the UK, has prompted fears of substantial job relocations from the UK financial services sector.

Regulators in the UK and Europe have also begun undertaking work to assess the potential implications of Brexit for financial and market stability.

The BBA argues in its submission that secondary, rather than primary, legislation will be sufficient to implement the body of EU law, largely owing to the volume of work required and parliamentary time constraints.

The BBA declined to comment on Sunday.