Brexit Will Cost The UKs Financial Regulator $42 Million

Britain’s financial watchdog said it needs to dedicate £30 million ($42 million) of spending to deal with the impact of Brexit on the financial services sector next year.

In its latest annual business plan, released Monday, the Financial Conduct Authority (FCA) said it would devote £14 million of spending on the U.K.’s withdrawal from the European Union by delaying or reducing “non-critical” activity.

That leaves £16 million which the regulator will have to raise itself. It said it will raise £5 million by targeting firms most likely to be affected by Brexit with fees, another £5 million will come from FCA reserves and the remaining £6 million will come from fees charged to firms as part of new regulations.

“We recognize that this year we need to dedicate a significant amount of resource to withdrawal from the EU,” FCA Chief Executive Andrew Bailey said in a statement Monday.

“As a result, setting our priorities this year has involved a particularly rigorous level of scrutiny and challenge to focus on areas where we see the greatest potential for harm.”

London’s financial services industry has been quietly preparing for Brexit given that it’s likely to lose its EU passporting rights — meaning that it will need extra licenses to serve EU-based customers.

Various banks have said they may need to put more resources into EU countries due to Brexit, and are looking to cities like Dublin, Amsterdam, Paris and Frankfurt as they prepare for the U.K.’s withdrawal from the bloc.

– CNBC’s Silvia Amaro contributed to this story.