A Brexit research group is calling for the government to consider striking a bespoke equivalence agreement as part of the EU departure deal to maintain access to the Single Market for the financial sector.
In a report published today, which was compiled by law firm Norton Rose Fulbright on behalf of the Financial Services Negotiation Forum (FSNForum), the researchers note the current European model of equivalence will not provide firms with the same levels of market access as the current passporting regime and is not the "silver bullet" fix to losing that bundle of rights.
Instead, the report calls for a so-called "building blocks" model of equivalence, which is based on the broader concepts of equivalence deals around the world, such as mutual recognition and cooperation on data sharing, rather than dealing with the finer details of the regulation involved.
The report argues this will provide a more dynamic kind of access to the EU market, rather than a static set of rights which, crucially, could be pulled overnight if the UK decides to diverge in its regulation at any point in the future.
"Equivalence with the EU may facilitate less access than membership of the Single Market, but it is readily provable, less costly in terms of budgetary contributions and avoids the politically challenging conditions of a 'passport'," said Anthony Belchambers, the chairman of the FSNForum's honorary advisory council.
Daniel Hodson, the chairman of the FSNForum's executive committee, added: "The building block model provides a logical and practical approach which could be of use not just in the Brexit negotiations but a really useful tool for the development of global regulation."
And Norton Rose Fulbright financial services regulatory partner Peter Snowdon remarked: "In the financial services sector, the big question is what sort of access the UK can have to the EU single market when, in all likelihood, it loses its passporting rights."