The UK's top markets regulator puts £2.5 million towards a Brexit task force as 'uncertainties' grow

LONDON — The UK’s top markets regulator said the lack of clarity around the Brexit negotiations will have knock-on effects for markets and uncertainty for firms and consumers.

The Financial Conduct Authority, which oversees markets, funds and financial behaviour, said it would devote £2.5 million of its £527 million annual budget to a Brexit task force.

Brexit “creates a number of uncertainties with the potential to affect the UK and European financial markets, with potential knock-on effects for the UK economy, tax, balance of payments, and the value of sterling,” the Financial Conduct Authority said in its annual business plan on Tuesday.

“With little information available about the form and nature of these negotiations, it is currently unclear how these will materialise,” the FCA said.

“This lack of clarity will potentially lead to a period of prolonged uncertainty for markets, firms and consumers. Firms will need to assess the impact that a changed relationship with Europe and any changes to the regulatory regime have on their business models,” it said.

The regulator added it would work with the Treasury and the Bank of England to keep markets operating normally and “bridge the gap between policy, markets and firms.”

Here’s the funding requirement:

Brexit threaten London’s financial passport — an agreement that allows banks with a base in the UK to access customers and financial markets in the (currently) 28-nation EU trading bloc. Prime Minister Theresa May has signalled her intention to pull the UK out of the EU single market.

The Financial Conduct Authority (FCA) said last year that 5,500 UK companies rely on passporting rights, with a combined revenue of £9 billion.

“Both we and the Government are keen to ensure that the financial services industry remains resilient and well placed to meet users’ needs and thus make the most of opportunities in a post-Brexit world,” Andrew Bailey, CEO of the FCA, said.

“Leaving the EU inevitably creates a higher risk of disruption to our Business Plan priorities. So it is particularly important that we retain the flexibility to respond swiftly should we need to review them further.”

More from Business Insider UK:

NOW WATCH: WATCH! The premiere episode of Henry Blodget’s new markets and economics show

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.