Uncertainty surrounding the outcome of Brexit negotiations are hindering global financial services’ ability to prepare, despite a substantial number identifying the process as a risk to their business, according to  new research  by ACCA (the Association of Chartered Certified Accountants).

The report Brexit’s impact on Financial Services surveyed professional accountants working in financial services organisations around the world. It found that 40% of respondents viewed Brexit as posing a greater risk than opportunity, as opposed to only 16% who saw it as more of an opportunity than a risk.

Despite this, nearly a quarter (24%) had made no plans or were unclear over what to do – with a further 32% being only at an early stage of planning. Insufficient or unclear communication by government and regulators on the proposed approach was cited as the primary obstacle to better preparation.

Uncertainty over the negotiating stance by both the UK and EU in key areas such as equivalence and mutual recognition in the light of a potential ‘hard Brexit’ were among the major concerns.

Responding to the survey Helen Brand OBE, chief executive of ACCA, said,

The financial services sector has a key role to play in helping organisations navigate the challenges and complexities of Brexit but a lack of detail from policy makers in the UK and Brussels is hindering their ability to do so. 

While discussion over Brexit has focused on the effect on the UK economy, London’s status as a global financial hub means that the Article 50 negotiations have implications for financial services around the world.

First-class financial services are integral to the UK but, as the world’s largest net exporter, they are also highly significant to economies in the Eurozone and beyond.

The industry occupies a premier position in the UK’s economy. It employs 1.1 million people, earns between £190bn and £205bn in annual revenues and generates an estimated £60bn–£67bn in taxes each year. 

The UK is the world’s largest net exporter of financial services, and in 2015 the EU accounted for 41% of the UK’s total financial services trade surplus.  The UK’s relationships with the EU and other trading partners are therefore critically important.

Helen Brand continues,

It is also not necessarily true that London’s loss will be straightforwardly Europe’s gain in the negotiations: some global businesses may be more willing to relocate elsewhere or simply scale back European operations if uncertainty persists. New York could prove to be the biggest winner.

Maggie McGee, Director of Professional Insights at ACCA, says,

That preparations are either lacking or in the early stages for many financial service firms is a concern, although perhaps not surprising given the lack of clear guidance at this stage of the negotiations.

SMEs seem more likely to view Brexit as an opportunity compared to larger organisations, who appear to be more cautious and concerned about the global economic and regulatory outlook. Yet SMEs are also less likely to have begun preparations, possibly due to a lack of capacity and avenues for seeking advice.

It is in the interests of financial services organisations, large and small, to seek out the advice and insight of professional accountants through this process to ensure they are well-prepared for the future.

The report Brexit’s Impact on Financial Services draws on the views of 271 ACCA members working in the FS sector around the world, including a quarter based in the UK and a fifth from Europe. The intention is to provide a point-of-view from the perspective of accounting and finance professionals within financial services organisations around the world. These individuals are typically at the heart of the decision making processes (both planning and implementation) that shape their organisation’s response to Brexit.

Therefore, this is a bottom-up view that acts as a ‘temperature gauge’ to capture the mood of professionals at the front-line, to complement a policy level top-down view. Additionally, the paper is informed by interviews conducted for this paper with six professionals working within or advising financial services organisations including Citi, Innovate Finance, Oliver Wyman, PwC and GoCardless.

The ACCA report Brexit’s Impact on Financial Services is available to read here: http://www.accaglobal.com/gb/en/professional-insights/global-economics/brexit-impact-on-financial-services.html

Ends

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Notes to Editors

About ACCA

ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants. It offers business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management.

ACCA supports its 188,000 members and 480,000 students in 178 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. ACCA works through a network of 100 offices and centres and more than 7,110 Approved Employers worldwide, who provide high standards of employee learning and development. Through its public interest remit, ACCA promotes appropriate regulation of accounting and conducts relevant research to ensure accountancy continues to grow in reputation and influence.

Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. It believes that accountants bring value to economies in all stages of development and seek to develop capacity in the profession and encourage the adoption of global standards. ACCA’s core values are aligned to the needs of employers in all sectors and it ensures that through its range of qualifications, it prepares accountants for business. ACCA seeks to open up the profession to people of all backgrounds and remove artificial barriers, innovating its qualifications and delivery to meet the diverse needs of trainee professionals and their employers. More information is here: www.accaglobal.com