On 17 October 2019, the FCA published a memorandum of understanding (MoU) agreed between itself, HM Treasury, the Bank of England (BoE), and the PRA on equivalence and exemptions. The MoU has been established in accordance with Regulation 6 of the Equivalence Determinations for Financial Services and Miscellaneous Provisions (Amendment etc) Regulations 2019 (Equivalence Regulations).

The MoU sets out how the parties expect to coordinate the discharge of their respective functions in relation to equivalence and exemption determinations and the provision of information or advice under the Equivalence Regulations. The BoE has also updated its webpage on the UK’s withdrawal from the EU explaining that these are new functions that will be transferred to UK authorities on exit day.

HM Treasury will be responsible for determining the equivalence of, and the application of exemptions to, any country or territory outside the UK (third countries), where such a function is provided for in legislation. It may make determinations that are partial, time-limited or subject to other conditions.

The BoE, PRA and FCA are now responsible for providing support to HM Treasury for matters concerning their regulatory functions. This includes providing information or advice in connection with any consideration of a new equivalence determination. The regulators are also responsible for recognising third-country firms which operate in the UK under an equivalence determination, where this is provided for in legislation.