If the UK and EU fail to agree an equivalence deal it will not be the end of the world, according to KPMG’s head of FS Karim Haji, who was feeling upbeat about the future of financial services in the UK.
Haji, who was made KPMG’s head of FS in June 2019, acknowledged an equivalence deal between the UK and EU would “make life easier”, but argued it was not mandatory for a successful FS sector.
“It’s not that if we don’t have [an equivalence deal] things will suddenly stop working or become very difficult,” he said. “I don’t believe that at all, and actually most of the clients I talk to definitely recognise that.”
The City lost its pre-Brexit access to EU markets on 1 January when the UK left the single market and customs union.
Brussels can grant direct market access for foreign financial services firms if it deems their home market rules are similar to the EU’s own standards, a designation known as equivalence.
Haji said equivalence deal or no equivalence deal, London could maintain its spot as a global leader in financial services
“If you take a step back, the UK has been one of the leaders in financial services regulation and infrastructure, it’s one of the key innovators in the space as well, and one of the leaders in the world, and that’s why the UK has been successful in exporting financial services – that isn’t changing as a result of Brexit,” he continued.
“The regulatory regime that we had before Brexit and today is by and large the same, and many of the regulations that we talk about in terms of EU regulations, the UK was not only an active participant, but quite a leading thinker, and the relationship between the UK regulators and the European regulators is still strong, so I think that there are lots of positives.”
Haji would not be drawn on whether he thought it likely the UK and the EU would secure a deal for FS, but saw a bright future for the UK, whatever the outcome.
“I think we can stay an international, world-recognised and world leading financial centre, just like cities that are in the US. We will continue to be in that space, I don’t see that changing,” he added.
Haji’s comments come about a month after the UK and EU agreed the terms for future cooperation on financial services between the two jurisdictions.
The Memorandum of Understanding agreed upon creates a framework for voluntary regulatory cooperation in financial services between the UK and the EU, and will establish the Joint UK-EU Financial Regulatory Forum, which will serve as a platform to facilitate dialogue on financial services issues.
UK and European officials have been locked in discussions about the future of financial services since January.