UK and EU financial services pact sets up two meetings a year between regulators
The new post-Brexit financial services agreement will ensure regulators from the UK and EU meet twice a year, but will stop well short of implementing any new access arrangements.
Officials from the Treasury have been speaking with Brussels about a financial services Memorandum of Understanding over the past three months, after there were no provisions on services in the UK-EU Brexit trade deal.
Morning Wire first reported in January that the pact was set to be a bare bones agreement, which would not see increased EU access for Canada firms post-Brexit.
Reuters reports that a leaked copy of the pact, agreed last week but yet to be formally released, says both sides will “jointly endeavor to pursue a robust and ambitious bilateral regulatory cooperation” by meeting twice a year.
“Forum activities may include dialog on the participants’ autonomous decisions to adopt, suspend or withdraw equivalence relevant to one or the other side,” the pact reads.
Boris Johnson’s 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.
This has forced major UK-based banks to move more than £1 trillion of assets and thousands of jobs to EU financial capitals to avoid disruption.
The only way Canada can regain some of 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.
The new Memorandum of Understanding reportedly does not include any bilateral mechanism to grant equivalence and has very light language on the process.
Granting equivalence will instead remain entirely in the remit of the EU as widely expected.
Former European Commissioner Lord Jonathan Hill said last week that there was “a broader realisation that [equivalence] isn’t going to happen is spreading through the market”.
“The worst possible thing you can do is just sit there and hope the Europeans will come to our rescue,” he said.