After the UK’s momentous vote to leave the European Union, the country faces two years of exit negotiations and the re-drawing of regulations. So what might Brexit mean for ethics and compliance in the UK?
In my view, over the short term, the answer is not a lot—certainly not until Article 50 of the Lisbon Treaty is triggered. But there are other reasons we believe it will be business as usual for the compliance industry and compliance professionals in the short to medium term.
- First and foremost, excelling in ethics and compliance is a major investment and in our experience businesses that are committed to improving their ethical standards will remain so regardless of the political landscape.
- Secondly, the UK has always been a pioneer in ethics and compliance regulation. The UK has many of its own compliance laws that are separate and distinct from those in the EU; many of the current EU regulations were, in fact, formulated in the UK before they became EU law.
- Finally, in order for the UK to remain a relevant market participant in the EU economy, it will be required to mirror many of the EU’s laws. The EU’s General Data Protection Regulation (GDPR), which comes into effect in May 2018, is an example of the kind of law the UK will be expected to comply with even if it is no longer an EU Member.
What else will stay the same?
- The UK Bribery Act 2010: The UK Bribery Act is independent of the EU and so its laws will remain unaffected by Brexit.
- Employment Law: With the free movement of labour a key tenet of free trade in the EU—which the UK is likely to wish to retain—we expect UK employment law, and therefore key workers’ rights, to continue to follow EU style law and remain largely unchanged following Brexit.
- The Modern Slavery Act: This law, which was introduced in 2015, extends only to England and Wales, so will be unaltered by Brexit. It will continue to impact EU firms whose supply chains extend into the United Kingdom.
- Financial Services Regulation: The UK is a financial regulation leader in Europe. New whistleblower rules introduced earlier this year by the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) to encourage employees to speak up when they see wrongdoing will be unaffected by Brexit because they are separate to EU law.
And what might change in the future?
- Competition law: UK competition law is affected both by UK and EU laws—UK law takes precedence in purely national cases, however EU law takes precedence whenever the effect of a business’s conduct permeates borders. So post-Brexit, the split between UK and EU laws could make areas like M&A transactions more complicated and costly. In reality, however, in order to retain competitiveness, it is unlikely that future UK competition law will deviate wildly from European law.
- Healthcare regulation: The healthcare industry is heavily affected by GDPR so in some respects the sector will see little regulatory change, for the reasons outlined above. However, with the European Medicines Agency currently headquartered in the UK, there are questions about the agency’s future here and where medicine monitoring and safety checks will be carried out if the UK doesn’t remain a part of the EEA.
To better understand how Brexit might impact upon compliance regulations that affect your business, contact an ethics and compliance expert today.