U.K. asset managers and insurers have been voicing their fears over the potential consequences of a Britain outside of the European Union.

In a speech last week, U.K. prime minister David Cameron promised to hold a referendum on Britain’s membership of the EU by 2018 if his Conservative party were re-elected at the next general election, which is expected in 2015.

Asset managers in the U.K. manage significant amounts of assets for European investors and also via EU-based investment funds.

“A U.K. asset management industry outside of Europe may find itself facing obstacles to the continued management of assets for EU-based investors,” said Rob Mellor, hedge fund leader at London-based accountancy firm PwC. “This is a fundamental risk to the growth of the industry.

“The EU Commission has and will continue to establish the regulatory framework for the distribution of EU-based investment funds. This is and will be the case under Ucits and AIFMD.”

The City of London is Europe’s premier financial services location, with many firms based there, but a future EU without the U.K. on board may actually threaten this dominance and lead to a profound shake-up of the asset management space.

“Asset management in the EU benefits hugely from the U.K. industry’s involvement, both commercially and from its positive influence in the shaping of regulation,” said Peter de Proft, director general of the the European Fund and Asset Management Association, an industry body representing the buy side.

“We also believe that the U.K. asset management industry gains hugely from the single market.”

Insurers, too, have reservations as to the potential ramifications of Cameron’s speech.

“A lot hangs on the details,” said Paul Clarke, global insurance regulatory leader at PwC.

“The referendum might lead to the U.K. still being regarded an EU member in full, a member of the economic area or outside of the EU completely. Until such details are ironed out the full impact is very difficult to predict.

“Potentially the biggest impact on the insurance industry will be on regulation. The EU drives the regulatory environment, Solvency II being a classic example.

“Not being part of the EU would hand more discretion to domestic authorities over rule design. From a practical point of view, it is likely the U.K. would choose to pursue a Solvency II equivalent approach. Ironically the risk would be a U.K. outside of the EU, unable to influence from within, yet still compelled to follow EU regulation to remain competitive.”

While others in the financial services sector were also equally skeptical about the move by Cameron to potentially jettison the U.K. from the clutches of Brussels.

“The single market is the EU’s greatest asset and is of crucial importance to the banking and financial services industry in the U.K.,” said Anthony Browne, chief executive of the British Bankers’ Association, a U.K. trade body.

“We are clear that we want the UK to remain an active participant in the single market, helping to write the rules and push for greater trade and economic growth.”

If the U.K. were to actually exit the EU, seismic regulatory changes would probably ensue, including the exiting of the MiFID, Emir, Ucits, AIFMD and Solvency II regimes, with the U.K. possibly adopting a model akin to how fellow European nation Switzerland—which is not a member of the EU—runs its financial services sector.

However, some commentators believe that the move by Cameron may actually improve the U.K.’s standing in Europe as the threat to leave may be just that and Britain, which appears to have many divergent views from the other member states, could actually bolster its negotiating powers on issues such as regulation.

“Cameron’s speech on Europe is generally reckoned to be his best as prime minister and it could well yet lead to the double bonus of the U.K.’s staying in the EU and recruiting other leaders to the cause of very necessary reforms,” said Alastair Winter, chief economist at investment bank Daniel Stewart.