The government has moved away from mutual recognition of regulation after exiting the European Union, instead pursuing an arrangement that will see financial services companies having scaled-back access to each other’s markets.
The government released its much-awaited Brexit White Paper today.
Mutual recognition would have resulted in the UK and EU recognising each other’s rules for fund managers, banks and insurance providers.
Investment Association chief executive Chris Cummings says it is disappointing the government will not pursue mutual recognition.
However, he says: “A solution based on enhanced-equivalence can deliver a deal that works for savers in the UK and across Europe, and for the asset management industry that supports them.”
PWC Brexit head Andrew Gray says: “Equivalence decisions can be reversed at short notice and the process can be unpredictable at times. The government is proposing that these issues are addressed by the EU by covering all key sectors and by making the equivalence process more predictable for businesses.”
The white paper also outlines the government’s commitment to building a reciprocal arrangement to ensure retired Britons who live in Europe will retain their pension rights when the UK leaves the EU.
In the white paper, the government says it is pushing for “defined mobility provisions” protecting British citizens who will continue residing in the continent.
The government came under fire after revealing pension liabilities will add €9.5bn (£8.4bn) to the UK’s leaving costs in its Spring Statement in March.
The paper released today says: “Given the depth of the relationship and close ties between the peoples of the UK and the EU, the UK will make a sovereign choice in a defined number of areas to seek reciprocal mobility arrangements…consistent with the ending of free movement, that provide for other defined mobility provisions including arrangements to ensure that UK citizens living in the EU continue to benefit from their pension entitlements and associated healthcare.”
A review will also be taken for those people who have contributed funds into multiple countries’ social systems.
The UK is expected to leave the European Union on 19 March 2019.