The Economic Secretary to HM Treasury, John Glen MP, has responded to the House of Lords EU Services Sub-Committee’s queries on UK-EU regulatory cooperation for UK financial services post-Brexit.
In its letter to Baroness Donaghy, chair of the Sub-Committee, HMT sets out the following:
UK-EU equivalence decisions
- The UK has adopted a reasonable, proportionate but thorough approach to its equivalence assessments and is committed to an outcomes-based approach to equivalence;
- This approach will need to be based on common high standards and cooperation with overseas jurisdictions to ensure they achieve their objectives and can be effectively monitored thereafter;
- Any decisions the UK will make for third countries, including the EU, will be based on these principles; and
- The Government intends to publish a Guidance Document on the UK’s equivalence framework which will set out the process in more detail.
Future UK-EU regulatory cooperation
- HMT does not want to compromise the UK’s regulatory and decision making autonomy and would not expect the EU to do so as part of any agreement on cooperation;
- HMT has put forward the concept of having an Annex to the free trade agreement (FTA) that would cover regulatory cooperation in financial services;
- The EU would prefer to agree to regulatory cooperation outside of the FTA;
- HMT does not think this difference in structure will limit any future engagement between the UK and the EU.
Future regulatory framework
- The Government will shortly publish a consultation paper on the second phase of the Financial Services Future Regulatory Framework (FRF) Review;
- The model the Government will be consulting on aims to ensure an agile and responsive framework by allowing the UK financial services regulators to use their expertise and experience to lead on developing regulatory requirements for firms;
- HMT calls for engagement with Parliament in relation to parliamentary scrutiny on this approach;
- The Government will consider the responses to this first consultation and use these to inform a second and more detailed consultation in 2021.