LONDON, Sept 20 (IFR) - Almost 13,500 banks, insurers, asset
managers and other financial firms are using "passporting" to
allow easy access between Britain and the rest of the European
Union, underscoring the importance of the issue in Britain's
exit negotiations with the EU.
Andrew Bailey, chief executive of Britain's Financial
Conduct Authority, said in a letter published on Tuesday that
13,484 firms were using the passporting arrangements and 359,953
passports had been issued.
More firms in Europe were using passporting than UK-based
firms but the data show heavy skewing towards London as a
There were 8,008 firms using "inbound" passporting (issued
by the other 27 EU states to allow them to do business in
Britain or elsewhere), and 5,476 were using "outbound"
passporting (issued by a UK authority to a UK firm to give it
access to the rest of the EU), according to the data in the
The data showed there were 336,421 "outbound" passports
awarded to UK firms. That far exceeded the 23,532 of "inbound"
passports in the FCA data.
That is partly because major firms typically require
multiple passports, so a UK firm conducting one type of activity
in 27 other countries would require 27 passports. The inbound
data only include firms passporting into Britain from another EU
or EEA state.
The data were requested and released by Britain's Treasury
Select Committee, which is assessing the impact of Britain's
vote to leave the EU on the financial services industry.
"These figures give us an initial idea of the effects of
losing full access to the single market in financial services.
The business put at risk could be significant," said Andrew
Tyrie, chairman of the Treasury Committee.
Financial passporting allows firms that are authorised in
one EU country to provide services across the 28 EU states. It
is a key reason why London has become such an important
financial hub, as many firms use it as a gateway to Europe.
Banks and financial firms are worried Britain will not be
able to agree arrangements that are equivalent to the current
system. That could see international banks scale back in London,
but also hurt European firms' access to capital markets.
"None of the current off-the-shelf arrangements can preserve
existing passporting arrangements, while giving the UK the
influence and control it needs over financial services
regulation as it develops," Tyrie said, urging UK negotiators to
make it a priority in Brexit negotiations.
"Efforts to secure an appropriate arrangement for UK-based
firms will be one of the most challenging aspects of the
negotiations about the UK's future relationship with the EU."
Passporting procedures differ depending on what kind of
passport is requested. The types of business that may be
passported are set out in the markets in financial instruments
directive (MiFID) and the capital markets directive (CRD). One
activity may require several different passports, meaning firms
will often have more than one passport.