The asset management industry faces "maximum regulatory uncertainty" as the slow pace of negotiations pose the threat of a "blind Brexit" where the future relationship between the UK and European Union (EU) is unknown, Lord Peter Mandelson has warned.
Speaking at the Investment Association's Annual Policy Conference on Tuesday (26 June), Mandelson - who previously held various Cabinet positions across the Tony Blair and Gordon Brown governments, as well as several high-profile trade roles for the EU - said the UK government must work to secure more time to negotiate a trade deal with the bloc.
He explained: "The government has already decided that we will not accept the offer that has been made by the EU27, which is to leave the EU but remain within the economic structures and economic area.
"It fundamentally affects everything else. It means we have decided as a country to place ourselves completely outside the customs regulatory area of the EU.
"At the same time, we have not decided what sort of plan we want to devise and put in place in light of that decision.
"We face the prospect of a blind Brexit and leaving the EU without knowing what is going to follow. We are facing the prospect of maximum regulatory uncertainty for this industry, like many others."
Mandelson said it is now impossible for the government to "hammer out a deal with the EU27" within the Article 50 timescale, which has the UK scheduled to leave the bloc in March 2019.
He added this is exacerbated by the fact the government will now not meet to discuss its Brexit negotiation position until 5 July - after the European Council is set to meet.
Mandelson said: "Until the UK government decides it wants a deal with the EU and what that plan is, there is nothing for the EU27 to discuss, or for the European Council to discuss.
"Government should be seeking an extension of the timescale".
Also speaking at the conference, the Financial Conduct Authority's (FCA) Christopher Woolard commented that the regulator and its overseas partners in the EU27 were also being held back by the pace of negotiations.
Woolard explained: "At the moment, there is a lot of bi-lateral and multi-lateral contact between regulators.
"But there is a problem if 'nothing is agreed until everything is agreed', it is very hard from a regulatory respective to begin to actually start pinning things down, allowing people to make progress.
"From a regulatory perspective, [regulators] have to follow the timetable and political process."