The publication of the Government’s White Paper in July 2018, setting out the Future Relationship Between the United Kingdom and the European Union, saw a dramatic change of direction as a mutual recognition model for financial services was dropped from the negotiation objectives and instead replaced with a desire to improve the EU’s current arrangements surrounding equivalence.
The UK Government has proposed new economic and regulatory arrangements for financial services, preserving the mutual benefits of integrated markets and protecting financial stability while respecting the right of the UK and the EU to control access to their own markets, whilst at the same time noting that these arrangements will not replicate the EU’s passporting regimes.
The UK Government’s position set out that the new regulatory arrangement would be based on ‘the principle of autonomy for each party’ and that there should be reciprocal recognition of equivalence under all existing third country regimes, taking effect at the end of the implementation period.
AIA strongly welcomes proposals to continue a system for the mutual recognition of professional qualifications, enabling professionals to provide services across the UK and EU. This will provide much needed assurance for professionals working across Europe and beyond; it is also vital for public and investor confidence and moves to ensure the continuity of standards beyond Brexit.
Most businesses may initially welcome the White Paper as it provides a degree of clarity on the UK’s negotiating position. However, businesses will also be keen to examine and analyse in-depth the proposals on offer. AIA’s priority is to examine the proposals in the White Paper and engage with government on how this new approach can be made to work in the interests of our members, their clients and businesses.
It is AIA’s intention to review this White Paper in more detail over the coming weeks and prepare a comprehensive response with our members working in small and medium sized enterprises and the wider finance economy. We look forward to continuing to work with the UK Government and contribute to securing the best possible outcome for the Brexit negotiations and future relationship with the EU.
Philip Turnbull, AIA chief executive, said: “Whilst it is disappointing that the UK Government has ruled out mutual recognition as its preferred option it remains clear that negotiations require compromise to progress. Care must be taken to ensure EU equivalence and adequacy under the EU’s third country regimes for accounting standards and audit regulation post-Brexit. Importantly, with less than 40 weeks remaining until the UK leaves the EU, more detail is needed on these proposals and how they will impact business across the UK.”