Here’s what the IRSG had to say
A regulatory advisory group to the financial and professional services sector has today outlined a framework for EU market access as government embarks on Brexit negotiations.
The International Regulatory Strategy Group (IRSG) proposes how the UK and EU could agree reciprocal market access in financial and professional services as part of its new relationship post-Brexit. The model would be based on mutual recognition of each other’s regulatory and supervisory regimes, enabling firms based in the UK to continue trading services across the EU and vice versa, with minimal disruption to their customers.
The paper, Mutual recognition a basis for Market Access after Brexit, outlines possible criteria for access, the mechanisms for maintaining regulatory alignment, and how possible disputes between the UK and EU in relation to access could be resolved.
The paper concludes:
- Criteria for access: Where global standards exist, and are robust and detailed, the criteria for access should be based on these. These could include those set by the Basel Committee on Banking Standards, International Organisation of Securities Commissions (IOSCO) and the Financial Stability Board (FSB).
- Mechanisms for dialogue: A joint UK-EU committee or forum could be established to make sure that regulation and principles of supervision are monitored as they evolve over time. It should also assess the impact of divergences, for example consulting on new legislation before it would be brought into effect.
- Dispute resolution model: If the members of the new committee fail to agree on impact of divergences, a dispute resolution model would be necessary to deal with disputes between the UK and EU. This report sets out a range of models for dispute resolution mechanisms which already exist in free trade agreements or other arrangements. But the report suggests that an entirely new model might equally be developed. These disputes could be referred to a new independent panel, made up of global standards setters (such as the FSB or IOSCO) or a new panel of experts predominantly from outside the UK and EU.
Mark Hoban, chairman of the IRSG, said: “To minimise disruption and unnecessary cost for customers, the financial and professional services sector has been calling for a bespoke agreement to support the freest possible trade between the UK and the EU post-Brexit. This is why we support the Prime Minister’s call for a bold and ambitious free trade deal.”
“This report fleshes out how this ambitious deal could be structured to provide a robust framework for continued cross border trade. There are no easy solutions here but if the goal is to avoid fragmentation and maintain deep and liquid financial markets which benefit customers, then the UK and the EU will need to work together constructively to strike the right deal.”
The International Regulatory Strategy Group’s (IRSG) report earlier this year, EU’s Third Country Regimes and Alternatives to Passporting, concluded that the focus of the Government’s Brexit negotiations should be delivering a bespoke UK-EU deal rather than reforming or adapting existing EU third country equivalence regimes for market access. This follow up report develops how a bespoke arrangement could work in practise.