This Saturday, two years will have passed since the UK’s historic Brexit referendum, however, as the uncertainty remains about the details the exit, a series of financial services share their thoughts.
“With only eight months to go until the UK leaves the EU, wealth managers have a way to go when it comes to contingency planning.”, says Linda Gibson, director of regulatory change and compliance at BNY Mellon’s Pershing Limited. “Business preparation, regardless whether it’s a hard Brexit, needs to cover multiple touch points, including operational, staffing and third-party suppliers – wealth managers need to have a robust project plan in place,” she added in a statement.
The firm makes six considerations wealth managers should account for to get Brexit-ready, starting with the understanding that this is not just a compliance matter. Brexit planning should be treated like any other business transformation project by taking aside the political uncertainty aside and preparing for all types of scenarios, it said.
“We expect some hard decisions will have to be made by wealth managers. They may realise that the cost of repapering so soon after MiFID II and migrating investors to new legal entities, including the additional requirement of new regulatory permissions or licenses, will be prohibitively costly. Ultimately, it may be more effective to relinquish certain investor relationships and double-down on high-value business where delegation rights can be easily maintained”, the firm added.
For Philippe Waechter, chief economist at Ostrum Asset Management, the outlook is gloomy. “The main effort is to reduce uncertainty for everyone, from households to companies and foreign investors. That would be key for a recovery. But the current negotiation with the European Commission and the weakness of Theresa May and her Parliament do not remove the risk of a hard Brexit and a situation that would have a persistent negative impact on the UK economy,” he said.
The lack of progress is also cause for concern. “Two years after the Brexit referendum, stunningly little progress has been made in executing the withdrawal. That lack of progress has in turn led to a lack of clarity on the part of UK firms,” said Dave Lafferty, chief market strategist at Natixis Investment Managers.
Schroders points out that two years on and none is the wiser. Theresa May’s “precarious position greatly increases the chances of a collapse in her government, and potentially a hard-Brexit,” Azad Zangana, Schroders senior European economist, said in a statement.