Authorities should not dictate where financial firms should be located after Britain leaves the European Union, Andrew Bailey, chief executive of the UK's Financial Conduct Authority told a Reuters Newsmaker event on Thursday.
"Firms should be able to take their own decisions on where they locate, subject to appropriate regulatory arrangements being in place which preserve the public interest," Bailey said.
"Authorities should not dictate the location of firms."
Banks, insurers and asset managers based in Britain are drawing up contingency plans to shift some operations to the EU after Brexit in 2019 in case access to the single market is closed off.
But Bailey questioned whether restricting trade in this way is an inevitable or necessary response to Brexit.
"When I hear people say firms need to re-locate in order to continue to benefit from access to EU financial markets, I start to seriously wonder."
Future financial sector relations with the EU should be based on regulatory co-operation, he said.
Read other news on the city site of London.