The United Kingdom acceded to the European Economic Community in 1973, an organisation that has gradually evolved into the European Union that we know today. Concurrent with the evolution of the European Community has been the transformation of the very nature of the British economy, from a largely production-based one in the first half of the 20th century to one dominated by the services industry in the present day. Official statistics evidence this: in 2013, 79% of the UK’s GDP came from the services sector, up from 46% in 1948. Financial services account for a significant proportion of the UK’s services sector, indeed the UK remains the world’s largest exporter of financial services. The importance of this sector to the UK economy as a whole can, therefore, not be understated and a critical analysis of the impact Brexit will have on the legal regime of UK financial services is essential.

The UK has been a member of the European Union for over forty years. An inevitable consequence of this membership has been the application of EU-wide laws on financial services and an integration and entwinement of European law with domestic UK law. As the UK prepares to leave the European Union, this essay will attempt to evaluate the impact this will have on the legal regime of British financial services. At this juncture, the precise settlement that the United Kingdom and European Union will reach is uncertain. What is certain, however, is that the “corporate citizens” of the EU may be profoundly affected by Brexit . Moreover, leading academics judge the plausibility of a so-called ‘no deal’ Brexit, as “anything but unlikely” . Particular focus will be given to the impact of Brexit, particularly a sub-optimal Brexit (from a corporate perspective), the passporting regime, and the third country equivalence regime. Due consideration will also be paid to the impact Brexit will have on relevant domestic legislation and the implications on some of the important sectors that form part of Britain’s crucial financial services industry. Finally, this essay will endeavour to analyse the opportunities that Brexit may create for the British financial services legal regime, with particular respect to areas in which the UK excels and is regarded as a pioneer, notably in connection with FinTech, and innovations such as the prized regulatory sandbox: “The UK’s Financial Conduct Authority…has been leading the way in nurturing and regulating FinTech. Its ‘sandbox’ is one of the most innovative supervisory solutions that helps new and traditional entrants test a range of innovative products” . Other UK regimes, such as the senior managers regime will also be examined.

An examination of the ‘passport regime’, and the implications of Brexit on this regime, will act as a cornerstone of this essay. In essence, passporting enables firms that are authorised in any EU/EEA state to trade freely in any other EU/EEA state with minimal additional authorisation. An EU passport enables a fi