Britain’s vote on the referendum to leave the EU is not legally binding and does not represent a formal notification to withdraw from the EU.  The referendum is advisory rather than mandatory and in theory Parliament could ignore the will of the people by deciding to stay in the EU.1

Next steps related to Brexit are complex and dynamic, both politically and legally.  In order to begin the process of exiting the EU, Article 50, as set out in the Lisbon Treaty, will need to be invoked.  In addition the British Parliament will need to pass the laws that will let Britain exit out of the EU.2

What are the implications of Brexit on Financial institutions?

Financial institutions have been able to historically provide services to clients and engage in investment activities throughout Europe based on passporting which allow UK-based firms to operate on a cross-border basis within the EU.3 With the Brexit vote, it is likely that passporting will no longer be available, potentially forcing firms that wish to access EU markets to move their operations within those markets.  This may result in financial institutions making changes to their European legal entity structure and the location of some roles.

Passporting rights

UK-based financial institutions may find themselves struggling to serve European clients as they are at risk of losing passporting rights.  Passporting rights allow British-based institutions to sell into the rest of the EU without having a branch there, under the EU’s UCITS (Undertakings for the Collective Investment of Transferable Securities) and AIFMD (Alternative Investment Fund Manager Directive) directives.4 This is how the British subsidiaries of non-EU banks are able to do business throughout Europe from London.

Depending on the outcome of the exit negotiations, investment managers may find themselves having to move to a European Economic Area (EEA) fund hub, such as Luxembourg or Dublin, to maintain their unconstrained access. This would be both time consuming and costly.

Implications for cross-border activity

Many foreign institutions have a presence in the UK to service the UK financial market, a large number of non-EU financial institutions also use their UK presence as a hub to access clients and markets across the EU.

The extent of the impact of Brexit will depend on the arrangements negotiated and put in place during the transitional period but there are cross-border activities that should be considered:

  • Continued access to European markets – EEA firms which currently conduct business in the UK may not have access to the European markets. The loss of the passport system for UK financial institutions would likely trigger some migration of global firms’ EU headquarters away from the UK.
  • Market infrastructure – The benefits of MiFID (Markets in Financial Instruments Directive) and EMIR (European Market Infrastructure Regulation) may no longer be available to UK-based institutions. Firms operating UK-based trading venues or clearing or settlement systems should consider how they can continue to service EU-based firms or link up with an EU-based market infrastructure.

The UK financial-services firms would find themselves having to follow EU law such as the AIFMD and MiFID II. The UK firms may still be able to access EU markets, but with no representation at EU level, UK regulators would have no say over the design of rules that UK firms would be required to adhere to.5

Take-aways for clients

For now, nothing is expected to change. The UK will likely stay in the EU for two years or more while they negotiate the terms of the exit.

Financial institutions are encouraged to develop their contingency plans and identify the impacts of Brexit to their business:

  • Strategy – growth and relative attractiveness of UK / EU markets
  • Financial Markets – volatility and disruption, including currency fluctuations, interest rates, equity and bond markets
  • Customers and Clients – communications, reassurance, managing impacts of legal entity moves
  • Corporate Structure – legal entity, branch, subsidiary changes required to retain UK and EU market access
  • Regulation and Regulators – changes in regulatory oversight / changes in regulatory regimes
  • Market Infrastructure – retaining access to funding and crisis facilities as well as exchanges, clearing houses, payments systems
  • People – communications, reassurance, managing impacts of legal entity moves. Changes to talent pool locations, costs, level of flexibility and employment law
  • Third Parties – effects of trade agreements on costs / contracting entities and locations
  • Data and Technology – changes in data protection regulation impact (e.g. General Data Protection Regulation), constraints on data location and sharing
  • Real Estate – head office or other location changes
  • Migration – depending on the above, timing and mechanisms for making changes to legal entities, capital, assets, people, technology, data, customers

For the world’s big banks, still trying to rebuild eight years after the financial crisis, Brexit should inevitably bring additional regulatory and compliance requirements and possible changes to existing requirements which may lead to additional expense and disruption.

For more on Brexit, see a blog post covering the short term implications of Brexit on the conduct and culture agenda.


  1. “Brexit: what happens when Britain leaves the EU,”Vox World, June 25, 2016. Access at: “Brexit: What happens now?” BBC News, June 29, 2016. Access at:
  2. Ibid
  3. “International banking in a London outside the European Union,” The Economist, June 24, 2016. Access at: “The economic impact of ‘Brexit’,” Capital Economics report for Woodford Investment Management, February 2016. Access at: “Brexit: Impact on financial regulation,” Bloomberg Intelligence, June 15, 2016. Access at:
  4. “Brexit: Impact on financial regulation,” Bloomberg Intelligence, June 15, 2016. Access at:
  5. Ibid

Newsletter Author: Samantha Regan, Hamish Wynn, Dimple Ruparel, Mairi Bryan
Newsletter Contact Person:
Nghi Pham

Visit for latest insights on regulatory remediation and compliance transformation.


This blog is intended for general informational purposes only, does not take into account the reader’s specific circumstances, may not reflect the most current developments, and is not intended to provide advice on specific circumstances. Accenture disclaims, to the fullest extent permitted by applicable law, all liability for the accuracy and completeness of the information in this blog and for any acts or omissions made based on such information. Accenture does not provide legal, regulatory, audit or tax advice. Readers are responsible for obtaining such advice from their own legal counsel or other licensed professional.

About Accenture:

Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions—underpinned by the world’s largest delivery network—Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With more than 373,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Its home page is

Copyright © 2016 Accenture. All rights reserved.

Accenture, its logo, and High Performance Delivered are trademarks of Accenture. This document is produced by Accenture as general information on the subject. It is not intended to provide advice on your specific circumstances.

If you require advice or further details on any matters referred to, please contact your Accenture representative.

Submit a Comment

Your email address will not be published. Required fields are marked *