International Regulatory Strategy Group
Published 23 Jan 2017
There is currently a significant amount of cross-border business (in both directions) between the UK and the rest of the EU, and our analysis should be of benefit to financial services providers on both sides of a future UK/EU border.
We have not considered the concept of ‘passporting’ in detail, as the scope and availability of passporting is already well known to the industry and the UK Government has indicated that it does not intend to pursue an approach that relies on the continuation of passporting. Instead we have focused on identifying what the alternatives to passporting could be.
Under existing EU law, there are ‘third country regimes’ already in place, which allow financial services providers from outside the EU to have access to parts of the EU financial services market.
This report contains a factual matrix which provides details of:
As a result, the report concludes that the UK should be looking to reach a bespoke agreement with the EU, allowing wider, mutual rights of market access, to reflect the unique position of the UK in relation to the EU and reflecting their integrated and interdependent markets. The report provides insights into some of the mechanisms which could be used to structure a relationship based on this new approach, if enhanced access across the UK/EU border can be agreed politically.
The report also provides a detailed analysis of what the position would be if the UK, after Brexit, does not secure a bespoke agreement and is not able – or not willing – to comply with the conditions of the third country regimes. This analysis includes input from a number of key EU jurisdictions regarding the extent to which a firm from a non-EU country can undertake business in those jurisdictions without obtaining a local licence – for example, by relying on reverse solicitation, and the extent to which it could outsource activities from to the UK from a subsidiary established in those EU jurisdictions.
Finally, the report considers the importance of agreeing transitional arrangements and suggests measures that the UK should be looking to agree with the EU, as soon as possible, to give reassurance to the financial services industry on both sides of the future UK/EU border.