Britain and the European Union are approaching a co-operation agreement on financial regulation at the end of this month in a step that could help give businesses in the City of London more access to the internal market.
According to a person familiar with the negotiations, the EU can grant the so-called partial regulatory equivalence for some financial products once the separate memorandum of understanding on financial regulation has been reached.
Although the two issues are formally separated, securing a common framework around certain financial services rules could help unlock limited equivalence decisions, giving UK businesses access to the wider EU market, the person said. who asked not to be identified. The EU and Britain would retain their unilateral right to grant or withdraw these equality pronouncements.
The two parties have been negotiating a memorandum of understanding on regulatory cooperation on financial services since January. The latest draft now calls on both parties to keep each other informed of their tax plans for the finance industry, as well as efforts to combat money laundering and terrorist financing, according to a separate person familiar with the matter.
“We are in a good place around the memorandum of understanding,” said Mairead McGuinness, the financial services commissioner. He spoke to a group of journalists in Brussels on Wednesday.
The European Commission and the British Treasury declined to comment on ongoing negotiations.
Northern Ireland
While the MOU talks are under way, the ongoing differences over Northern Ireland are raising tensions after Brexit, which could have an impact on equivalence decisions, another EU official said this week. A dispute over vaccine supply also increased the tension between the two sides.
The MOU, which is expected to be agreed by the end of this month, calls for a joint forum for the discussion of regulations and the exchange of information and provides for informal consultations regarding decisions to adopt, suspend or return equivalence. to draw.
That separate process of equivalence has been difficult so far. The UK has become increasingly frustrated with the EU’s unwillingness to make statements that will enable London’s finance companies to act in the bloc, while Brussels has frustrated over the UK’s proposed reforms to its financial rulebook. The lack of agreement threatened London’s decades of dominance over European finances.
Read more about equivalence
McGuinness said at a conference on Tuesday that decisions on equivalence will resume once a memorandum of understanding is in place. She stressed that the process is separate and that the UK is dependent on the rules of the bloc.
“Once the governmental co-operation framework is in place, we will resume the assessment of equality with the UK authorities,” she said. ‘But let me be clear on two points: first, there can be no equality with wide-ranging regulatory deviation. Secondly, we will only grant equivalence if it is in the EU interest – just as the UK has made its own equivalence decisions in their own interest. ”
However, the possibility of limited equivalence reflects comments made last month by France’s Clement Beaune, junior minister for EU affairs.
“There will probably be partial equivalence, probably by the end of the semester,” Beaune said in a February maintenance, pointing out that it would be ‘revocable, provisional, unilateral on the part of the EU’.
– With the help of Ian Wishart, Silla Brush and Aoife White