Britain said on Thursday it wants “legally binding” obligations on access to the European Union, EU financial market coupled with arrangements for maintaining trust as rules evolve.
London, Europe’s biggest financial centre, faces being locked out of its biggest export market for services like banking, insurance and asset management if there is no access to the EU financial market from next January.
A trade deal with the bloc should provide a “predictable, transparent and business-friendly environment” for cross-border financial services activities, Britain said in its mandate for trade talks with Brussels.
“The agreement should include legally binding obligations on market access and fair competition,” the document said.
The EU has only spoken of “voluntary” cooperation in financial regulation.
The financial sector has said that the EU system of market access, known as equivalence, is opaque, and access can be withdrawn in 30 days, making it unreliable.
Britain says it wants arrangements to allow regulators on both sides to cooperate and build “enduring” that can deal with rules as they “evolve”.
Britain fears that the EU would seize on any divergence from EU financial rules as an excuse for what incoming Bank of England Governor Andrew Bailey called a “punch up” with UK regulators and a scrapping of access.
Britain and the EU have agreed to assess each other for financial market access by the end of June.
The mandate says that Britain has left the bloc with the same rules as in the EU, thereby providing a “strong basis” for concluding the assessments on time.
A senior aide of Michel Barnier, the EU’s chief trade negotiator, said last week that completing assessments in June would not mean an actual decision on access.
A decision on EU financial market access would consider progress on a wider UK-EU free trade agreement in obtaining access to UK sectors like fish.
Barnier said on Wednesday that UK financial firms that want certainty in their relations with EU customers can set up subsidiaries in the bloc, which over 300 have done.
For the others there is equivalence, Barnier said.
“But these equivalences will never be global nor permanent. Nor will they be subject to joint management with the UK. They are, and will remain, unilateral decisions,” he said.