The Legal Update

We’ve waited, we’ve debated, we’ve theorised, we’ve read the forecasts, but the question of Brexit’s impact on the UK and the financial services market still looms large. Obelisk Support recently attended the UK Financial Services Brexit and Beyond Summit, a City & Financial Global event, to get some insight on managing the EU withdrawal process from a legal perspective. Note that this Summit took place before the UK Government presented its Brexit Bill and some things might have changed.

The overall feeling in the room was that the UK should and would be leaving the EU as ‘global Britain’. Most in the industry were confident that Brexit would not change London’s standing as a global financial powerhouse, even in the event of no deal. John Glen MP, Economic Secretary, pointed to the UK FinTech industry was worth £7.5bn, giving the UK an advantage that other marketplaces did not have. However, this is not without a lot of work currently being done, and to come, to prepare for every eventuality and the inevitable legislative and regulatory changes that would follow. Some job losses would also be consequences, but these were stated to be a ‘fraction of original Bank of England predictions’.  

New Regulatory Responsibility

The UK FCA will have temporary authorisation to wave/manage authorisations to allow temporary operation until agreement is signed, Nausicaa Delfas of the FCA confirmed. Firms will not need to make many changes to be compliant and are advised to take their own legal services on how to manage a no deal Brexit, for themselves and their customers. Firms must let customers know about how their services/products/rights and protections in contractual terms will change. There will only be a need to move client’s activity if it is in client’s interest. Customers will be protected when we leave via the Ombudsman regime.

Areas of risk will include contractual continuity, data adequacy, and clearing, which need agreement on both sides, and transfers of personal data between UK and EU raise questions. On Day One, the UK will have equivalent framework to the EU’s. Outcome based equivalence is the principle – our rules do not need to be identical but achieve similar outcomes with market-specific rules. The FCA welcomes US FCA rules, which have broadly equivalent outcomes. Unsurprisingly, predictable and stable regulations are necessary for financial services to thrive. 

Legal Clarifications and Myth-busting

The next task involved debunking some of the myths relating to Brexit in a panel discussion with Michael Dougan (MD) Professor of European Law and Jean Monnet Chair in EU Law, University of Liverpool, Chris Allen (CA), General Counsel, Clients and Products, Standard Chartered Bank, the Rt Hon The Lord Garnier QC (G) and Paul Hardy (PH), Brexit Director at DLA Piper. 

MD kicked off with a ‘back to basics’ reminder about the withdrawal act and the withdrawal agreement bill, both bases to avoid unnecessary disruption. EU law is not designed for third countries and was created for state members. The withdrawal agreement bill requires separate legislation if we are to reach an agreement. Much of EU law can be incorporated into UK law without reference to the withdrawal act and EU law will be in place until the end of the transitional period. He stressed that there would be no such thing as a happy ending, whether the country reaches a deal or no deal, remains or leaves. We just have to deal with the consequences of Brexit as it is happening.

G stressed that ministers have had to power to create secondary legislation throughout acts of parliament for a long time, acts that can bridge the gap until the full transition has been completed.  CA was concerned about the sheer volume of legislation to check and be translated into UK law. The huge amount of complexity and the volume make this a very challenging task. The reality is that 800 pieces of secondary legislation have to be adopted before March 2019, going through sifting committees at the House of Commons and the House of Lords. Brexit illustrates the difficulty of incorporating a multilateral system for all into a unilateral system for all.

Post-Brexit Contracts Continuity

For James Smethurst of Freshfields, the validity of contracts depends on whether or not licences are required. Take derivatives: Mere payment under these contracts is not a regulated activity, unlike entering into compression or new contract. Look at particular activities: Regulated activities for insurance is not so much entering as performing the contract. Any activity beyond payment may require licences. What would be the consequences of performing the contract without licences?

Validity & Enforceability

Additionally, what is the governing law of the contract? If it is UK law, the agreement will remain legal and valid without loss of authorisation. The place where the contract has to be performed will impact its enforceability. If an activity has to be performed in a EU member state and that contract is therefore illegal in the UK, is it unenforceable under UK law? Not necessarily. The answer depends on whether engaging into a contract constitutes an ‘adventure to break the laws of a foreign state.’ Even if the contract remains valid and enforceable, could one of the parties terminate for loss of authorisation? Are there reps of warranties within the agreement and whether they are given only at the outset of the agreement, repeated at any point during the contract or continuing? What’s the consequences of one of the parties losing its authorisation  and could the doctrine of frustration be invoked?

Most complex financial services contracts should have provided for the loss of authorisation. The regulatory risk is quite high for insurers as they might be subject to sanctions and regulatory scrutiny in EU member states. Regulatory exposure of firms means they might need to address that risk and transfer that contract to another entity in a EU member state that has the authorisation. 

Talent Retention & Immigration Law

Ilda de Sousa, partner at Kingsley Napley LLP, discussed the situation of EU nationals currently in the UK. The transitional period is slated to last from 29 March 2019 to 31 December 2020. Freedom of movement should not be an issue during that transitional period. The EU secondment scheme will go live on 29 March 2019 and is aimed at EU nationals and their family who can show residency.
There will be an app to download with 3 questions:
  1. Nationality,
  2. How long they’ve lived in the UK,
  3. Criminal convictions.
If a residence of over 5 years in the UK can be established with proof, the home office will access HMRC data and EU nationals will be prompted to pay a £65 fee (£32 for under 18s). For stay-at-home parents without HMRC records, they would need to produce documentation to show residency, with no more than 6 months outside of the UK during 5 years. Otherwise, they would have to apply for pre-secondment status. They would be granted leave to remain until they reach the 5-year period. By 30 June 2121, all EU nationals must have applied for secondment/pre-secondment status.
What about EEA nationals and Switzerland? Norway has struck a deal with the UK government and other countries are negotiating. New immigration rules should come into effect on 1st January 2021. The concern is if you haven’t clocked up 5 years or been granted leave to remain, then there would be no recourse to reach a settled status. In a no-deal scenario, the rights of EU nationals to stay in the UK will be honoured.
The question is, how to attract future EU nationals after Brexit? Pending immigration white paper, EU nationals should be treated like non-EU nationals but rules might be less restrictive for higher skilled workers. Immigration is very expensive and businesses might have to face £1000 per year for a visa in addition to government fees. Is this the best way to make the UK as attractive as it should be? 


To paraphrase Nausicaa Delfas of the Financial FCA, with less than 5 months to go, the focus was on providing certainty and confidence to firms and their clients operating in the UK, which involved being ready for all possibilities. While she emphasised the need for London to keep influencing global standards, it was pretty clear that without certainty, firms would need to change how they operated on the basis of a worst case scenario. 
The Legal Update

At Obelisk Support, we regularly get requests from clients to assist them in Brexit-related matters, whether it’s in the banking industry or regarding general commercial law. As Brexit is still very much a shifting concept, its legal implications are not as clear-cut as businesses would like them to be. That’s why we were very excited when we learned that Helen Tse, lawyer at Clarke Willmott, was working on a book about doing business after Brexit, featuring a range of experts in the most common legal fields affecting professionals in the U.K. Finally, a book that tells you how Brexit could affect your business.

We are very proud that Obelisk Support CEO, Dana Denis-Smith, and her husband, John Denis-Smith, both contributed a chapter in this book, each in their area of expertise. To get the inside scoop, we caught up with Helen Tse on the legal implications of doing business after Brexit.

#1 How did you come to spearhead this project?

In June 2016, before the referendum, nobody envisaged that Brexit would happen and when it did, a slight panic occurred as to what would happen. As a lot of my clients were calling to know what was going to happen for them with Brexit regarding their property or their business, I pitched the idea of this book to Bloomsbury and they were interested.

I started writing at Christmas time in 2016, because there wasn’t much that we could write until we knew a bit more. To get a steer as to what the government would envisage Brexit to be, I contacted the Brexit department (Department for Exiting the European Union) led by David Davis. This book is based on their guidelines.

#2 Who is the book for?

It is for fellow lawyers, anybody in the professional services sphere who has to advise on Brexit issues, as well as companies, SMEs, high net worth individuals, and anybody with an interest in business. It even features a section by Nigel Barratt that talks about the landscape for investor from abroad. We see Brexit as an opportunity to invest in the UK, as it’s 20% cheaper. The sterling has devalued, therefore buying a property in the UK is a great opportunity.

#3 How did you structure this book and why?

Initially, it was going to be purely an academic piece on leading lawyers from different specialist areas on how they think the law will change. But then, I thought that it would be good to have a business section and created a section on thought-leadership. How might business owners envisage that Brexit would impact their business? So the book is two-part, academic on one hand and pragmatic businesslike on the other.

Doing business after Brexit is such a broad topic that you’ll never be able to cover the whole range of topics, but from a business perspective you can address employment, corporate, commercial, property, corporate finance, and all things that you need to make the business flow. What this book won’t say is how individuals who have a property in Spain will be affected. This is a book strictly about business.

#4 Each one of the book’s chapters is written by a different legal expert. What was the biggest challenge about coordinating these contributors?

The book features about 30 contributors. There are a lot of thought leaders in the frame. My main challenge was to get everybody to deliver on time and then edit contributions to get a constant flow about everything. That took all my weekends, as the book is 400 pages long. Given everybody’s busy schedules, there were slight delays so that impacted my schedule too but we got the job done.

#5 Did anything surprise you in the book?

Looking at Brexit is little bit like the ostrich approach. Nobody knows what to do, so you assume that it’s not going to happen. For instance, if repatriation happened, what would happen to the business? If you’re a UK business getting goods abroad, what would happen? On a business level, a lot of businesses still don’t know what to do or what’s going to happen. This book is very timely and will be a great mind map for many companies and professionals.

The book looks at worst-case scenarios. That was surprising to me, but it was necessary to guide business owners. 

#6 Do you deal with similar issues at work?

I specialise in M&A and right before the referendum, we had a few transactions that had come to terms. The price had been agreed. Payment terms had been agreed. It was basically good to go, except that Brexit happened.

After the referendum, did the buyers still want to go ahead with the transactions? Some buyers went ahead but others decided to wait and see, they did not wish to proceed with the acquisition. There was nothing wrong with the company, but the parties were just nervous about what would happen and the economic uncertainty.

I’ll give you a Lloyds bank statistic that appears in the book. On the day of the referendum, they stopped 100% of all mortgage applications. That’s how much uncertainty can impact a business and that’s why it was important to write this book.

#7 How did you guide your authors and where did you draw a line?

From a book standpoint, we had very clear guidelines with the publisher at Bloomsbury regarding drafting style, the number of words or how each contributor should focus on their particular area of law. Legally, though, we instructed that all authors deal with a hard Brexit situation. It makes it much more feasible for a contributor to give their piece.

#8 Did writing the book change your view on Brexit?

Personally, I was not for Brexit but we are where we are. We do the best of the situation that is being given. I remain very pragmatic and as a lawyer, want to make sure that my clients are protected. It really remains to be seen whether Brexit was a good decision or not but as lawyers, we need to be flexible and adapt.

Let’s take the example of a manufacturer who buys his supplies as raw materials coming from Germany. With the post-Brexit currency changes, the supplies might not be affordable anymore. Under a normal contract, you can only terminate for force majeure or frustration. Instead, we’re inserting Brexit clauses into contracts. The book gives you clauses to think about. They haven’t been drafted by anybody yet and we are definitely  leading the way in that respect.  However until Brexit has happened, we cannot have a clear view of what these templates could be.

#9 What online resources would you recommend to lawyers and general counsels to keep up to date with Brexit legal issues?

First, I would say download the kindle version of this book to have it handy. As far as UK resources, I really like Brexit & Law as well as PLC and LexisNexis.

#10 What next?

I get my weekend back! Of course, we’re going to do a presentation of the book on September 20 in Manchester. All the details are here.

About Helen Tse

Helen Tse is the first port of call for SME companies, high net worth individuals and entrepreneurs regarding corporate and commercial law matters. Helen herself is an entrepreneur, a published author and the recipient of the coveted MBE from Her Majesty The Queen in 2014.

A graduate in Law from Cambridge University with a professional career has included Clifford Chance, London & Hong Kong, PricewaterhouseCoopers and Walkers in the Cayman Islands, Helen Tse is highly sought after and an authority in the world of business. Her combination of legal and business acumen stands her heads and shoulders above her peers.


Obelisk was one of 30 London-based fast-growing technology scale ups to accompany the Mayor on his trade mission to NYC and Chicago this month. The Attic caught up with Dana to find out how it went…

What kind of businesses and individuals did you meet?

The Mayor of London is a great champion of small businesses, especially given our role as the largest job creators. So it was in this vein that he selected 30 fast growing businesses to join him on his US trip. The businesses had to focus on the B2B market as the nature of the trip was to introduce us to large corporate buyers and to showcase the strong businesses that are London-based.

The other businesses were absolutely fascinating – very innovative services and amazing variety of sectors. Most of them are technology-enabled ground-breaking businesses that are reshaping the industries they serve. The energy of the founders and leaders that joined was truly contagious – a lot of lessons can be learned from being in a peer-to-peer environment that is supportive and ambitious.

How did you enjoy opening the New York Stock Exchange?

This was a unique moment and without a doubt the highlight. It was wonderful that only the women leaders on the trip were invited to join the Mayor to ring the closing bell. Sadiq Khan is not only a supporter of SMEs but also a great believer of the economic value of women in the workplace, so that was truly a special moment.

What do you think of the work the Mayor and the London and Partners team is doing to show London is open for business?

The #LondonIsOpen campaign was a brilliant and positive response to the Brexit vote. It has kept the world’s eyes firmly on London as a business destination; they have done a lot of work to highlight the strength of the private sector, they showcased the fast growing businesses and the general open business environment that London offers as an enabler of building a business.

How important is it for growing London-based companies such as Obelisk to present themselves to the US market in the wake of Brexit?

All fast growing businesses are looking for markets in which they can grow, for business partners that value their services and that can underpin that growth. So being able to be in the US with the Mayor was fantastic from an access and credibility point of view. We now know we have a lot of help at hand to push for growth in the US, across that whole market.

Did you get much down time to explore as a tourist?

I started every day with a long walk – around the financial district or walking along the Highline which is a suspended garden walk along some decommissioned train tracks. Nothing beats jet lag like a walk and a hearty breakfast.

What was the most important take away for you from the experience? What do you hope to see in future once we leave the EU?

If you have a strong business, although a ready-to-access market can help, in the end you can take your services anywhere. Success has no borders.