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Valdis Dombrovskis told the Financial Times that Brussels was willing to grant the UK access through a system of “equivalence” decisions that are already used by banks and brokers in other countries such as Singapore and the US.
But he said that the European Commission would be especially vigilant in checking that British rules for ensuring financial stability and protecting consumers remained aligned to the EU’s own standards, and would act decisively in the event of any lapses.
Access will depend on Britain “not starting to engage in some kind of deregulation”, said Mr Dombrovskis, one of the new commission’s three executive vice-presidents. “The more systemically important the market is for the EU, the more we import potential risks, [and] the closer the regulatory alignment that is expected.” [...]
While financial services are critical to the UK’s services-based economy, Mr Dombrovskis’ comments nevertheless underline Brussels’ wariness about the EU’s continued reliance on London as its major financial centre.
They also reflect the bloc’s broader insistence that its future trading relationship with Britain must be based on a “level playing field” that prevents either side chopping away at regulations to gain a competitive advantage. [...]
Mr Dombrovskis, who will have sweeping responsibilities for economic and financial policymaking in the new commission, said that “it shouldn’t be overly difficult” for Britain to qualify for equivalence, seeing as “currently the UK is applying EU financial sector legislation.”
But if a country “is either diverging from EU legislation, or not following up EU legislation, in this case the equivalence determination can also be withdrawn”, he said. “It means that the UK should stay closely aligned with the EU.”
He noted that Brussels this summer had withdrawn equivalence from several countries’ credit-ratings agencies because laws there had not kept pace with EU rulemaking. [...]
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