October 17, 2018
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Partner Barnabas Reynolds, head of the Financial Institutions Advisory & Financial Regulatory Group, has published his fourth book on Brexit with Politeia, titled Free Trade in UK-EU Financial Services – How Best to Structure a Brexit Free Trade Deal.
In this publication he offers a new way to achieve “enhanced equivalence,” which is the U.K. Government's proposal on post-Brexit financial services contained in its, ChequersWhite Paper published in July. The Government has proposed mutual recognition for U.K.-EU services, with enhanced equivalence for financial services. Under the thinking behind the White Paper, which had been developed by Barney in his earlier publication, A Template for Enhanced Equivalence (Politeia, July 2017), existing access arrangements for the EU27 would essentially be continued, to the benefit of European corporates and consumers in facilitating the cheapest possible access to finance.
In his new proposal, Barney suggests a route for even more certainty -- a chapter in a free trade agreement setting out the detail of the arrangements, rather than relying partly on a free trade agreement and partly on operative provisions under domestic law. He also explains why two omissions in the White Paper, where it deviated from the Template, should be fixed: His proposal reinstates the role of an independent tribunal to oversee the application of the equivalence definition, and it applies the equivalence mechanic across all financial services areas from the outset.
Barney states: “The proposed agreement provides for a different route (but ultimately to the same end) to what was set out in A Template for Enhanced Equivalence. If properly implemented, a Free Trade Agreement would allow the U.K. and the EU to maintain the current levels of cooperation and to continue to develop a pan-European regulatory framework, building on their successful collaboration over the past years to mutual gain.”
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