On Monday, the Department for Exiting the EU published a presentation explaining the UK Government’s vision for the future UK-EU partnership on financial services, seeking to establish the principles of autonomy, bilaterality and co-operation.
Under the first of these, autonomy,it is proposed that each party (UK/EU) would be able to set its own rules.
Under the second, bilaterality, it is suggested that for as long as there is equivalence, the withdrawal agreement should set out “where cross-border service provision would be permitted and assessed under respective regimes” and that where there is to be disengagement then the two parties should “use consultation and mediation to explore solutions and agree timescales appropriate for the scale of changes before they take effect”.
Under the third principle, co-operation, it is suggested that EU and UK regulators should continue to cooperate as now, both “day-to-day and in crisis”.
The presentation is here.
Of course, this is only one party’s proposal and both parties to the negotiation have repeatedly reminded us that nothing is agreed until everything is agreed, but it is helpful to understand where the Government is coming from.
Today, the Department published guidance on what a no-deal Brexit would mean for the financial services industry. The document starts by setting out how the UK will continue to welcome EEA financial services businesses and will allow them up to three years after Brexit to complete an application for UK authorisation. It then goes on to explain that it cannot unilaterally solve the difficulties a no-deal Brexit would throw up for UK businesses with EEA customers. In many ways, this is unsurprising as all the UK could ever confer is access to its own market.
The $64,000 question for businesses in that position is whether they wait to see whether there is a deal that effectively allows passporting to continue or respond to the “nudge” in the final paragraph of that section (headed “Individual and business customers – EEA customers (including UK citizens living abroad) of UK firms operating in the EEA”) and set up an EU-authorised subsidiary through which to trade with those customers post-Brexit.
We will continue to watch this space with interest!