UK Finance calls for UK-EU reset on financial services

UK Finance, working with law firm Freshfields, has asked UK and EU leaders to place financial services on the agenda at the upcoming Leaders’ Summit and set out a three-stage roadmap to rebuild regulatory cooperation. The call comes ten years after the Brexit referendum.

The report identifies short-term priorities for the next two years. It recommends removing the time limit on central counterparty (CCP) equivalence so UK clearing houses retain access to EU markets and ending the sunset clause in the EU’s data adequacy decision, which currently allows data transfers from the EU to the UK for only a limited period.

For the medium term, covering about four years, the paper proposes structural changes to lower regulatory frictions and make it easier for skilled professionals to work across borders. One specific proposal is a UK-EU mobility agreement for financial services staff modelled on the Swiss Mobility Agreement, which would set predictable rules on visas, recognition of licences and cross-border work for bankers, lawyers and other specialists.

On regulation and innovation, the report recommends joint initiatives such as a UK-EU “competitiveness lab” and a shared regulatory sandbox where new products and rules can be tested together. The paper says these mechanisms could help align regulatory outcomes where practical while allowing each jurisdiction to keep its own policy priorities.

Looking further ahead, UK Finance sets out a long-term ambition for a formal treaty inspired by the 2019 UK-Switzerland Berne Financial Services Agreement and for a more integrated capital market across the UK, the EU, the European Economic Area and the European Free Trade Association. The paper frames these proposals as measures to reduce duplicated rules and legal uncertainty that have increased since the UK left the EU.

The report draws on targeted interviews with banks based in the UK, the EU and other jurisdictions, embassy officials, think tanks and trade groups. It asks political leaders to use the Leaders’ Summit to begin work on the short-term items and to commit to a longer process of building a more structured financial services relationship.

Kerstin Mathias, director of international affairs at UK Finance, wrote that the recommendations do not amount to a call for the UK to rejoin the Single Market. “The EU is a sophisticated bloc pursuing its own ambitious agenda and the UK, likewise, has its own regulatory framework, policy priorities and global commitments,” she wrote. “The two highly connected economies can achieve more where we cooperate.”