The European Union's system of financial-market access needs adapting to avoid disputes between the EU and Britain over rules after Brexit, a top UK regulator said.

Andrew Bailey, chief executive of the Financial Conduct Authority, said future regulation in Britain will hinge on where the EU system of "equivalence" leads to.

Equivalence refers to Brussels granting foreign banks direct access to customers in the EU if it determines that their home rules are similar enough to those in the EU.

But for this to work after Brexit, it needs a "rules of the game" agreement setting out how equivalence is determined and a mechanism for handling disputes, Bailey said.

Equivalence should be based on whether the outcomes of foreign and EU regulation are the same, rather than on actual rules being written in the same way, Bailey said.