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Lib Dems Tackle Tories Over “Passporting” Rights Post-Brexit

Former banker and Lib Dems Treasury spokeswoman Susan Kramer hopes her party can capitalize on Tory government failings in the U.K. general election next month.

  • Joe McGrath

The U.K. Conservative Party is taking London for granted in its approach to leaving the European Union, according to Liberal Democrats’ Treasury Lead, Baroness Susan Kramer.

The accusation from Kramer came in an interview with Institutional Investor as both parties enter their second week of campaigning for the U.K. general election, scheduled for June 8. The former Citigroup banker has been leading the Lib Dems’ campaign to secure better terms for the City of London in the ongoing Brexit negotiations.

Kramer criticized Tory policymakers for not adequately considering the impact that fund managers would suffer from losing “passporting” rights to the E.U. and said the government had given insufficient thought to the implications Brexit would have on U.K. clearing house operations. Passporting permits U.K. firms to offer their investment funds and services in Continental Europe through a reciprocal arrangement.

“Does the current Tory government take the City for granted? I would say absolutely,” Kramer said. “Everybody is worried about the ability to access E.U. and the government is underestimating the complexity of that.”

When the U.K. leaves the E.U. in 2019, British fund firms may lose the right to distribute their funds in the European trading bloc.

“The City is very concerned to lose [euro-denominated] derivatives clearing from the U.K. and quite a number of British entities will be harmed by the loss of passporting,” Kramer said. “I hope, very much, that the City is now more willing to listen to the Lib Dems.”

The Liberal Democrats were in power between 2010 and 2015, forming a coalition government with the Tories, as the Conservative Party is known, after securing 57 seats and 23 percent of the popular vote. They lost 49 of those seats in the 2015 election, wiping out gains made by the party over the previous two decades.

Kramer is hopeful that her career in banking and her role on various parliamentary finance and business committees between 2011 and 2013 will add weight to the message that the party is trying to get out to voters: the Lib Dems offer an alternative to the Conservative’s tough approach to Brexit.

According to Kramer, Liberal Democrats are campaigning to protect the U.K.’s fintech sector from any unnecessary shocks from a ‘Hard Brexit’, specifically the rights of E.U. nationals to remain in the country and to protect rights afforded to fintechs under the Electronic Commerce Directive.

The Tories, led by British Prime Minister Theresa May, expect Brexit negotiations will be difficult.

“The only way to secure the best deal in what will be very tough negotiations is through the strong and stable leadership of Theresa May protecting Britain’s interests,” a Conservative Party spokesman said. “Unless you vote for Theresa May and her Conservative candidates on 8 June, the weak, floundering and nonsensical Jeremy Corbyn will be leading our negotiations instead, propped up by the Liberal Democrats.”

Corbyn is the Labour Party’s candidate for prime minister.

“Corbyn has already made his contempt for the financial services industry clear, describing it as an ‘extractive industry’, showing he puts little value on the sector’s important contribution to our economy,” the Conservative Party spokesman said.

Kramer remains focused on the importance of passporting, noting that in relatively new “fintech world” firms in the U.K. are “quite shocked” by Brexit as they’ve always been European. About one-third of the founders and the chief financial officers of U.K.-based fintech firms are from Continental Europe, she said.

“As Britain is leaving the E.U., they are going to have to build their fintech business within the E.U.,” Kramer said. “If you are a U.K.-based fintech that has got to be scary to read.”