The City's blueprint report for regulation after Brexit is likely to become a foundational document when trade discussions are finally reached, one of the authors has today revealed.
Hogan Lovells partner Rachel Kent, who published the International Regulator Strategy Group (IRSG) report alongside former City minister Mark Hoban last month, told a Lords committee this morning it had gone down well with both UK and European authorities during their roadtrip both here and on the Continent.
The report calls for a bespoke agreement between the UK and EU27 with mutual recognition based on regulatory alignment and supervisory co-operation, a joint dispute resolution body, and a forum in which both sides can work together to implement new global standards. It has already received the backing of the influential Treasury select committee.
There had been "excellent engagement" from the UK government and regulators, who were "both instrumental at feeding in some more new ideas" that will form part of a future report, she said.
Brussels is not willing to discuss anything relating to future trade until the European Council agrees negotiators can advance to the second stage of talks.
But Kent and her team have presented the report to members of the EU27, the Brussels institution and Barnier's team "on an information provision basis, and it has been welcomed on the basis that it’s a piece of work looking at a potential solution that can be discussed at an appropriate time," she said.
"On my part, I am optimistic that it will be a sounding board or starting point for when the time comes to have that discussion," Kent added.
Hoban said it was seen as "a very serious piece of work" in Brussels, and that it had received "very little pushback" because it argues for a bespoke model, rather than a "flawed" enhanced equivalence route, which would result in the sector remaining under ECJ jurisdiction and continuing to be a "rule-taker".
The report can be used not just for financial services, but for other highly regulated sectors, Hoban noted.
It comes as Germany is reportedly working on proposals for a “comprehensive free-trade accord” with the British government. Bloomberg reports that the Foreign Ministry in Berlin has drafted a four-page document, the most detailed German position yet, for “future formal negotiations” about the UK’s relationship with Europe.
The document, which has surfaced as EU leaders head to Brussels to determine whether negotiators can begin discussing trade and transition, proposes a broad partnership that includes “at a minimum” the fields of foreign and security policy; fighting terrorism; cooperation on criminal justice; agriculture and fisheries; energy; transport, and especially air transport; research and digital issues
In the same hearing, Hoban called on the government to agree a "standstill period" before next March to give financial services and other industries "certainty and stability". A legally binding agreement was needed as soon as possible, but failing that a "communique" committing to a certain framework would be welcomed, he added.
In response to a question demanding "what, seriously, can be agreed by next March ?", Hoban said a standstill period, which would maintain the status quo, would lessen the impact of concerns around a failure to secure a deal before March 2019.
He added: "The Prime Minister has been very clear that she believes that a bespoke deal will be concluded by March 2019. On that basis, the standstill agreement would not be required, we would go straight into the implementation period.
"But if the Prime Minister was not able to agree her goal we would need a standstill period from March 2019 to point at which she agrees a bespoke agreement, and then implementation happens. How soon we get the final deal determines how long a transition period would be, and whether the balance is with a standstill or standstill and implementation period."