On 27 January 2020, the Department for Exiting the European Union (DExEU) published a letter from John Glen MP, Economic Secretary to the Treasury, to Lord Kinnoull, European Union Committee Chair, on equivalence in the area of financial services post-Brexit.
Mr Glen begins the letter by reiterating that the financial services provisions in the revised Political Declaration remain unaltered and that the UK’s ambition for a future relationship with the EU is one that respects the autonomy of both parties, while providing confidence and protecting financial stability. In order to achieve these shared goals, Mr Glen believes that a deep and comprehensive future relationship with the EU is necessary to stabilise the current equivalence framework. These arrangements will help to ensure strong ties that preserve market integration, financial stability and investor protection.
The letter goes on to state that the Government is ready to start equivalence assessments from 1 February 2020 (the day after ‘exit day’), and will endeavour to conclude these assessments before the end of June 2020. Mr Glen is confident that there is sufficient time over the next 5 months to seek equivalence across all 40 equivalence regimes.
After the UK withdraws from the EU and enters the transition period, the Government will not be required to follow the EU’s exercise of equivalence determinations. For example, the UK could make an equivalence decision for a third country when the EU has not. Mr Glen states that the equivalence process will be one of the key tools to facilitate cross-border financial services activity in the UK and it will be for the Government to decide how to exercise this in the UK’s best interests.