Greg Standing, Partner at Gowling WLG, says that the Financial Conduct Authority (FCA) Handbook has enough similarities with EU law so as to limit disruption for brokers and lessors, but that divergence between UK and EU law is bound to happen.
The Brexit vote has two principal implications. The effect, if any, on UK law; and the impact on the economy in the short, medium and long term.
It is very unlikely that all EU law will simply be repealed, certainly in the foreseeable future. As far as consumer credit is concerned, whilst the EU has imposed certain requirements such as the use of the SECCI, the majority of requirements are now imposed by our FCA Handbook. With the ongoing review of the Consumer Credit Act, it is likely we will see more consolidation in the Handbook and it is hard to see how Brexit will have any impact on this. In the longer run and generally speaking, we are bound to see some divergence between UK and EU law in the future. This presents a threat and opportunity.
The impact on the economy is perhaps the more significant concern. Nobody can predict what will happen in the long term but in the short term a downturn, if one materialises, and a loss of consumer confidence, is bound to feed into new car sales figures and consequently into finance. We may see an increase in insolvencies. Much will depend on the politicians and how much calm they can bring as the next few months play out.
Those companies exposed to the currency markets and European bank loans are likely to be affected in the short term, whilst there will be much for pan-European businesses to ponder in the medium and longer term. Investment decisions may be put on hold; on the other hand international businesses may look to capitalise on the fall in sterling to make acquisitions on the 'cheap'.
Politics is the art of fudge and I expect there to be a few twists and turns in this story yet. I would still not rule out us staying in the EU in some way shape or form or ending up with something that feels very similar. We will all have to watch and see.
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