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UK Chancellor signs financial services agreement with EU

Link(s):UK Chancellor to sign financial services agreement with EU – GOV.UK (www.gov.uk) 20210326_EU-UK_MoU_ISC__Final_June_2023_FINAL__002_.pdf (publishing.service.gov.uk)

Context

Chancellor of the Exchequer Jeremy Hunt (in Brussels to discuss UK/EU cooperation with his counterparts at the European Commission) has signed a Memorandum of Understanding (MoE) on financial services with Commissioner Mairead McGuinness, which will help to establish a constructive, mutually beneficial relationship between the UK and the EU in financial services.

Key points to note

The MoE signifies an important step in UK/EU relations post-Brexit. The UK is a leading global hub of financial services – of the £11 trillion of assets managed in the UK in 2020, around 44 per cent is on behalf of international investors including the EU.

The agreement will establish an ongoing forum for the UK and the EU to discuss voluntary regulatory cooperation on financial services issues. Both sides will share information, work together towards meeting joint challenges and coordinate positions where appropriate on issues ahead of G7, G20 and other international meetings.

The UK and the EU committed to the Memorandum of Understanding alongside the Trade and Cooperation Agreement. It adds to the growing number of regulatory cooperation arrangements the UK already has with major financial sector partners including the U.S., Japan and Singapore.

  • The activities of the Forum established by this MoE are expected to include: the promotion of timely domestic implementation of relevant international regulatory standards in the financial services sector taking into account the specific characteristics of the EU and UK regulatory regimes;
  • exchanges of views on the respective policies, rules and processes concerning deference regimes, such as equivalence, or other tools used to address cross-border issues;
  • discussions on macro-prudential developments and financial stability risks;
  • exchanges of views on regulatory issues, in a bilateral context, paying due respect to the regulatory interests of supervisory and resolution authorities and incorporating the views of EU and UK supervisory and resolution authorities;
  • keeping each other informed about efforts to prevent and combat money laundering and terrorist financing as they relate to the financial services sector.

Next actions

None – for information and awareness.