On 19 May 2023, HM Treasury published a Memorandum of Understanding (MoU) establishing a framework for financial services regulatory cooperation between the European Union and the United Kingdom of Great Britain and Northern Ireland. The MoU has been made pursuant to the Joint Declaration on Financial Services Regulatory Cooperation between the EU and the UK on 24 December 2020 where the parties would jointly endeavour to pursue robust and ambitious bilateral regulatory cooperation in the area of financial services.
The MoU has 16 points and is yet to be ratified. It provides for the establishment of a Joint EU-UK Financial Regulatory Forum which would meet at least twice a year to “undertake forward planning of regulatory cooperation,” “improve transparency” and “identify potential cross-border implementation issues.” Activities in the Forum include “sharing of information on regulatory developments”, “discussions on macro-prudential developments and financial stability risks”, “dialogue on the Participants’ autonomous decisions to adopt, suspend or withdraw equivalence relevant to one or the other side” and “exchanges of views on the respective policies, rules and processes concerning deference regimes, such as equivalence, or other tools used to address cross-border issues”. Significantly, the MoU does not create rights or obligations under international or domestic law, nor does it restrict either party from diverging from the other on financial services regulations.