LONDON (Reuters) – The European Commission is still waiting for Britain to say if it will diverge from European Union rules before Brussels can decide on UK financial market access, a spokesman for the EU executive body said on Tuesday.
Daniel Ferrie, the Commission’s financial services spokesman, said Monday’s announcement by Britain to grant EU financial firms selective access to the UK provided no further clarity on possible divergence from EU rules going forward.
With less than two months before Britain’s full access to the EU ends under post-Brexit transition arrangements on Dec. 31, London’s giant financial hub faces being largely cut off from its biggest customer.
Britain’s finance minister, Rishi Sunak, said on Monday he would not wait for Brussels to decide on UK access and would instead unilaterally allow EU financial firms to offer selected services to UK customers from January.
The EU is assessing access under its “equivalence” system that opens the way for foreign financial firms if their home rules are as robust as those in the 27-nation bloc.
“The Commission’s assessment of the UK’s relevant rules for potential equivalence decisions is ongoing,” said Ferrie, spokesman for EU financial services chief Mairead McGuinness.
It evaluates whether Britain’s future as well as current regulatory frameworks reach the same outcomes as those in the EU, he said.
Britain has indicated it will not apply some EU rules and look to amend capital requirements for insurers.
“The UK Treasury’s statement provides no further clarity on the UK’s possible divergence from EU rules going forward, or about the UK’s future supervisory practices,” Ferrie said.
The EU has only granted temporary access for derivatives clearing to date.
Expressing frustration with the EU equivalence process, Sunak told parliament on Monday that his team had spent months replying to Brussels even though EU and UK rules are the same.
“We haven’t had a single question back from the European Union after sending 2,500 pages of responses over to them,” he said.
Karel Lannoo, chief executive of Brussels think tank CEPS, said Britain had to stay open to EU financial firms if it wanted to remain a global financial centre.
But Sunak showed on Monday how Britain can move nimbly in financial services when the bloc faces lengthy process and compromises, he said.
“This is a threat for the EU, of which they are not yet aware,” Lannoo said.
(Reporting by Huw Jones; Editing by Mark Heinrich and Mark Potter)