This article first appeared on Export Experts in December 2016
Helen Child specialises in prepaid consultancy advice, with her company Striding Edge. She is aware of rising concerns over the future of international payments once Britain leaves the European Union.
‚ÄúStakeholders in European payments are still looking for guidance,‚Äù she remarks. ‚ÄúThe immediate post Brexit vote market turmoil has calmed, but the uncertainty about the future still remains.‚Äù
What risks are there? ¬†And what are the ways in which they can be avoided or overcome?
Payment institutions, regulated in the UK, could lose access to European markets. Currently the EU harmonises rights to conduct payment services in its different member countries with a passport system.
There is a real risk that in voting to leave the EU, UK payment firms would in future lose these passporting privileges, and therefore have to seek separate individual licenses to practice in different European countries.
There is also the issue of regulation. Currently within the EU, regulatory practices are harmonised, but if the UK is outside these regulations this might not just be about gaining freedom, but also losing the ability to easily operate further afield.
‚ÄúThere is also the fear of reputational risk,‚Äù Helen points out, ‚Äúthat the loss of passport rights will damage the UK‚Äôs global reputation, in particular that of London as a financial hub.‚Äù
Options and Clarity
A more optimistic view is that the loss of passporting rights will be both manageable and containable.
‚ÄúThere are new EU regulations due to come in for 2018, which may give UK firms access to the single market, regardless of passporting.‚Äù Helen says.
This is an EU directive covering the sale of securities, establishing that third-party countries may be granted similar rights to EU members providing they have equivalent regulatory standards.
However, as with much of what will happen post Brexit, the effects of this for the UK are still uncertain and speculative.
‚ÄúThe directive only covers certain activities, but then there may be room for other kinds of new regulation,‚Äù Helen remarks. ‚ÄúAt present it‚Äôs difficult to map out the options until there is far greater clarity about what will actually happen with Brexit and the form it takes.‚Äù
For now things are calmer. ¬†Professionals like Helen Child wait, ready to provide the necessary guidance around international payments to ensure that the UK‚Äôs businesses continue to thrive overseas.
To discover more about payment and money transmission options to benefit your business, please call¬†Striding Edge on 07771 563 274¬†or visit¬†striding-edge-ltd.com.
Helen Child’s View
Brexit has thrown markets into disarray as many view what lies ahead as uncharted territory. With so many variables at play the consensus appears to be to ‘play it safe’ and many brokers are even hedging their bets.
Whatever happens we know that Britain will be leaving the EU and that certainty brings with it another certainty which is that financial institutions who rely on their UK location to gain passporting rights will have to look for a viable backup plan.
Countries like Malta are currently positioning themselves as a viable alternative for many Banks and Financial institutions as this will allow them access to the EU single market without having to leave the UK