Dos and Don’ts of Brexit : The Future of the UK Financial Services Sector

This article examines the various possible scenarios for the UK financial services sector post-Brexit, and explores in more detail the case of credit rating agencies (CRAs) and the relationship with the Banking Union. The first part of this article sets out the stark choice the UK faces between EEA membership and third country status in the context of financial services and discusses the complex notion of equivalence under current EU financial legislation and the challenges equivalence presents, as the legal basis for the future relationship between the UK and EU financial sectors. The second part of the article focuses on the impact of Brexit on CRAs highlighting the possible dismantlement of EU legislation that could leave CRAs completely unregulated, which would exacerbate the problems with the liability of rating agencies and the governance of the ratings industry. The second part also analyses the consequences of Brexit in relation to the Banking Union and, in particular, to the banking recovery and resolution framework. It is argued that the UK could adopt different regulatory regimes for restructuring banks in crises facing risks of inconsistency in the implementation of resolving tools