EBF advisors: Pauline Guérin, Sergio Tringali, Jacopo Borgognone
Publication date: 29 May 2020
The ongoing Brexit negotiations on the future relationship will have a major impact on customers, businesses and citizens on both sides of the Channel. Irrespective of the outcome, the impact will not mean business as usual as the current situation where the UK is still part of the Single Market. Equivalence in the financial sector will most probably be a major tool for regulating interactions with third countries but will not replicate the benefits of Single Market membership. Against this background, the European banking sector calls on both sides to enable the development of the closest possible third-country relationship with the UK, to ensure a level playing field and fair competition, to provide legal clarity, and to build the trust that is needed to maintain a mutually beneficial bilateral relationship.
The purpose of the current paper is to outline the banking sector’s expectations for the future relationship in financial services, as well as providing views on how an equivalence regime could accommodate a mutually beneficial bilateral relationship between the EU and the UK, by preserving financial stability, market integrity, investor and consumer protection and fair competition based on a level playing field. While it is covered to a lesser extent in the paper, the UK’s assessment of the EU’s framework is as important as the EU regime. The following analysis presupposes a deal, the absence of which would raise a separate set of significant risks, which we analysed in 2019. In this context, with the chance of a no-deal scenario still very high, we urge both parties to agree to an extension of the transitional arrangement before the end-June 2020 deadline to give all parties more time to reach a satisfactory agreement, especially considering the exceptional circumstances arising from the ongoing health crisis. In any case, the European Banking Federation calls on all its members and on banks to finalize preparations for the end of the transition period and to envisage all the scenarios possible.
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