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.
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.
“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.”
A Treasury spokesperson said: “We are committed to working with the EU on financial services – as set out in the joint declaration – to establish a stable and durable relationship which supports financial stability, market integrity and consumer protection.
“The chancellor has also recently set out ambitious plans to renew the UK’s position as the world’s pre-eminent financial centre – making it more open, technologically advanced and a global leader in green finance.”