As reported by Reuters earlier today, Britain wants “legally binding” obligations on access to the European financial market, in conjunction with arrangements for maintaining trust as rules evolve. Despite being Europe’s largest financial centre, London is currently facing being locked out of its biggest export market for services such as banking, insurance and asset management if there is no access to the EU from next January.
Britain has said said in its mandate for trade talks with Brussels that the trade deal reached with the bloc should provide a “predictable, transparent and business-friendly environment” for cross-border financial services activities.
According to this mandate: “The agreement should include legally binding obligations on market access and fair competition.”
Reuters reported that the financial sector has said that the EU system of market access is “opaque” and access is unreliable as it can be withdrawn in 30 days. Meanwhile, the EU has only spoken of “voluntary” cooperation in financial regulation.
Britain has stated that it wants arrangements which will allow regulators within both the EU and the UK to cooperate and build enduring relationships which will be able to deal with the evolution of any rules. The fear within Britain at the moment is that the EU might seize on divergence from its financial rules as an excuse for the scrapping of access and disputes with UK regulators.
Britain and the EU have agreed to assess each other for financial market access by the end of June, according to Reuters, and the mandate says that Britain has left the bloc with the same rules as when in the EU, thereby providing a “strong basis” for concluding the assessments on time.
A senior aide of Michel Barnier, the EU’s chief trade negotiator, said last week that completing assessments in June would not mean an actual decision on access. Barnier said on Wednesday that UK financial firms that want certainty in their relations with EU customers can set up subsidiaries in the bloc. Over 300 of these firms have already done so.