The Lord Mayor of the City of London has said the goal of mutual recognition between UK and EU regulations following Brexit is ambitious but achievable, according to Reuters.
As Brexit negotiations continue there is uncertainty over how much access financial organisations such as banks, insurance companies, and asset managers will have to EU investors following Brexit in March 2019.
Mutual recognition would mean the UK and EU would have to maintain similar rules, allow close cooperation between regulators and agree an independent way to resolve disputes.
Lord Mayor Charles Bowman said the arrangement, which is supported by PM Theresa May, would be a “true win-win for Europe.” Bowman said: “Maintaining a default position of regulatory alignment, to underpin mutual market access, will give us so much.”
However, in January Brussels said this deal would not be acceptable as the UK cannot maintain the benefits of EU membership without the full set of obligations which apply to members.
French finance minister Bruno Le Maire has said that regulatory ‘equivalence’ may be the best solution for Brexit, and that financial services could not be part of a future trade deal between the EU and UK.
The longer there is uncertainty about the future of the post-Brexit financial services industry, the more likely organisations are to apply for licences to operate in the EU. Financial lawyers have speculated that clarity in this area is only likely to emerge at the last minute to encourage more companies to develop operations with the EU bloc.