British lawmakers launched an inquiry on Monday into how banks and insurers could maintain access to the European Union market after Britain leaves the bloc in 2019.
The House of Lords financial affairs committee said it will examine how regulation and supervision can evolve to ensure financial stability and potentially to maintain some form of close regulatory relationship to preserve market access.
The committee’s chairwoman, Kishwer Falkner, said there will need to be cooperation between British and EU supervisors and Britain will need to maintain its influence in global standard-setting to maintain market access.
“We would like to explore the options for such engagement,” she said in a statement.
Banks and insurers are already announcing plans to open new subsidiaries in the EU to ensure they can continue serving customers there after March 2019.
With the shape of Britain’s future trading terms with the EU unclear, the sector is focusing on persuading the government to negotiate a transition period to have more time to complete moves to Europe smoothly.
The inquiry will examine the scope for Britain to adopt its own financial rules, after backers of Brexit have said that the UK can write its own rules and ditch EU “red tape.”
Britain’s Financial Conduct Authority has warned against a “bonfire of regulations” after Brexit.
The committee will also examine if the EU’s “equivalence” regime is the best way for financial firms in Britain to access clients in the EU after Brexit.
This refers to Britain applying financial rules that are similar to those in the EU in return for access, a regime critics say is too unpredictable.
The committee will start public hearings in September. The government will respond to the committee’s findings.