The markets could be destabilised if the UK and EU cannot reach a Brexit deal, members of the House of Lords have warned.
The EU financial affairs sub-committee in the upper house said that the government needs to clarify its goals for the second phase of transitions, otherwise firms could uproot their UK businesses.
Financial services could be forced to activate "costly and potentially irreversible" Brexit contingency plans before the leaving date if the government does not provide more information to businesses soon, a new report concluded.
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"There is a risk of market fragmentation and financial instability if the UK loses access to the EU, as well as harm to customers and businesses," said Baroness Falkner of Margravine, chair of the sub-committee. "The UK’s financial services sector is a global asset and both sides should want it to continue serving clients throughout Europe."
The findings of the sub-committee's report into the financial services after Brexit also called for the UK to uphold the standard of financial services regulation which it helped to form in the EU.
Baroness Falkner continued: “Brexit is an opportunity to tailor the regulatory regime to strengthen the UK’s financial services sector, but the UK must remain committed to the international standards put in place following the financial crisis and continue to shape them to ensure a robust regulatory regime.”