The UK-EU Brexit trade deal does not include an EU-wide arrangement for financial services, with UK firms instead having to negotiate a patchwork of individual EU nations’ regulations.
The City of London’s most influential lobby group has urged Brussels
to grant Britain’s finance sector wide-ranging post-Brexit access as
talks between the UK and EU on financial services continue.
The CityUK today called for the EU to grant regulatory equivalence to
the sector, while also calling for the UK government to provide more
clarity on what future financial regulatory cooperation will look like
post-Brexit.
The UK-EU Brexit trade deal does not include an EU-wide arrangement
for financial services, with UK firms instead having to negotiate a
patchwork of individual EU nations’ regulations.
The only way the City of London
can maintain its pre-Brexit access to the EU is if Brussels grants
regulatory equivalence, however Brussels believes the UK is destined to
diverge from its financial services regulations and has withheld the
designation.
Read more: PwC’s new leader of FS: ‘The outcome of Brexit on financial services is still unknown’
Memorandum of Understanding
The UK and EU are currently conducting “memorandum of understanding”
talks that will guide future regulatory cooperation on financial
services.
It is expected that these talks will likely only produce an agreement to consult each other before making regulatory decisions.
The CityUK said today that the EU should unilaterally grant
equivalence for UK finance firms as it is “in the interests of customers
and clients in the EU”.
The group also called for the
memorandum of understanding talks to create “regular structured
dialogue, including transparency, clarity and certainty on the
unilateral processes of adoption, suspension and withdrawal of
equivalence decisions”.
CityUK chief executive Miles Celic said: “Our industry is pragmatic
about the increased friction to trade and cross-border transactions
which have resulted from Brexit, but we should still seek to minimise
this wherever possible. We urge both the UK and the EU to move quickly
and get these additional agreements in place.
Read more: LSE chief executive says ‘blank cheque’ companies could boost post-Brexit London
“The industry is as eager to see structured regulatory cooperation on
financial services between the UK and the EU, as it is to prevent
cross-border barriers to justice and ensure certainty on the movement of
data.”
Celic has said in the past that the City’s largest firms have been preparing for the worst case post-Brexit scenario since 2016.
This has led major UK-based banks
to move more than £1 trillion of assets and thousands of jobs to EU
financial capitals to avoid disruption.
Lord Jonathan Hill, the UK’s former financial services commissioner
to the EU, told the Financial Times last week that EU would “not do us
any favours” and that it was certain Brussels will not grant equivalence
for British firms.
Responding to the CityUK’s release, Labour’s shadow City minister Pat
McFadden said: “The government has been watering down expectations of
what will be achieved through the memorandum of understanding, but that
is not good enough for a sector of this importance to the UK.
“The
Brexit agreement was basically a no-deal outcome for financial services
and we need more than that if we are not to lose more business to other
countries.”
City AM
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