On 3 February 2020, the European Commission (Commission) published its recommendation for a Council of the EU decision authorising the negotiations for a new partnership with the UK. Page 4 of the recommendations contains the draft text of a Council. The Annex on page 8 sets out the Commission’s proposals for the future UK-EU relationship agreement.

The new partnership, as envisaged by the Commission, would respect the autonomy of the EU’s decision-making and its legal order, the integrity of the Single Market and the indivisibility of the four freedoms. Notably, the Commission wishes to ensure the protection of the EU’s financial interests and reflect the UK’s status as a non-Schengen third country that would not be entitled to the same rights and benefits as a Member State.

Paragraphs 42 and 43 of the recommendation sets out two paragraphs concerning cooperation on financial services. The paragraphs state:

  • The envisaged partnership should reaffirm the Parties’ commitment to preserving financial stability, market integrity, investor and consumer protection and fair competition, while respecting the Parties’ regulatory and decision-making autonomy, and their ability to take equivalence decisions in their own interest. This is without prejudice to the Parties’ ability to adopt or maintain any measure for prudential reasons. The key instrument the Parties will use to regulate interactions between their financial systems will be their respective unilateral equivalence frameworks.
  • The cooperation on financial services should establish close and appropriately structured voluntary cooperation on regulatory and supervisory matters, including in international bodies. This cooperation should preserve the Union’s regulatory and supervisory autonomy. It should allow for informal exchange of information and bilateral discussions on regulatory initiatives and other issues of interest, for instance on equivalence. It should ensure, where possible, appropriate transparency and stability of the cooperation.

The decision may be adopted at the next meeting of the General Affairs Council on 25 February 2020.