The UK and the EU’s top body have published the draft of a memorandum of understand, intended to improve post-Brexit regulatory cooperation on financial services.
The draft agreement commits the two to “jointly endeavour to pursue a robust and ambitious bilateral regulatory cooperation in the area of financial services”.
The MOU was heralded as a “significant step” to a more constructive relationship by economic Secretary to the Treasury and City Minister Andrew Griffith.
If agreed internally by the EU’s European Commission, it will be signed off by both the Treasury and EC, before coming into effect.
The draft agreement outlines that Britain and the EU have “a shared objective of preserving financial stability, market integrity, and the protection of investors and consumers”, which needed to be reassessed when the UK left the EU, and stopped being subject to its regulations.
Griffith said: “This is just the first yet significant step towards a more constructive financial services relationship between the UK and the EU – one that is built upon mutual benefit and in the spirit of cooperation.
“Our financial markets are deeply interconnected and this framework will mean we can engage with our partners in the EU, much as we do with other major partners like the US.”
Brexit imposed significant constraints on the City’s access to the single market. While the EU agreed to formalise cooperation between regulators, this was put on hold following longstanding disagreements between the two over Northern Ireland.
However, after these issues were resolved by the Windsor Framework, more progress could be made on issues such as regulation of financial services.
The arrangements in the MOU will allow for bilateral talks on regulatory developments, transparency, market developments and financial stability, and ‘enhanced cooperation’ when appropriate.
As part of the agreement, the Joint EU-UK Financial Regulatory Forum has been established to represent the joint views of the UK and EU commission, after they have had dialogue.
The draft made clear that the cooperation “should not restrict the ability of either jurisdiction to implement regulatory, supervisory or other legal measures that it considers appropriate”, while meetings will be held semi-annually in the UK and EU.
It added that the MOU “does not create rights or obligations ..nor will there be financial obligations”.