LONDON (Reuters) – A refusal by the European Union to grant access for the City of London would be taken into account when “doing the right thing” for financial services after Brexit, a British government minister said on Tuesday.
An UK-EU trade agreement from Jan. 1 does not cover financial services, leaving the global financial hub largely adrift from the bloc that had been its biggest export customer.
Both sides are committed to agreeing a memorandum of understanding (MoU) by the end of March for informal, regular talks between their regulators.
Swathes of stock and swaps trading have already left London for Amsterdam, piling pressure on the government to boost the City’s competitiveness in future rulemaking.
Once an MoU is agreed, Brussels has said it would assess access for the City under the bloc’s “equivalence” system, but only if it gets sufficient information on British intentions to diverge from EU rules.
“We are not taking part in a race to the bottom, we are not building an enormous bonfire of EU regulation… that would be totally counterproductive,” Britain’s Financial Services Minister John Glen told an event held by PIMFA, a financial advisors’ industry body.
Britain has published proposed changes to company flotations and fintechs, and will amend solvency rules for insurers.
“We have set out our direction of travel. What we are not going to do is to be in a situation where we don’t do the right thing by the UK financial services sector,” Glen said.
Britain will wait to see what happens with EU equivalence decisions, Glen said. In the meantime, it would hold a second public consultation on its plans for revamping Britain’s post-Brexit regulatory framework.
“We will look at what we need to do going forward in light of the absence of any determinations from the EU on equivalence,” Glen said.
“It’s up to the EU how much they want to embrace global high standards or how much they wish to take a different approach, looking perhaps more inwardly.”
(Reporting by Huw Jones; Editing by Alex Richardson)