On 29 April 2024, the House of Lords’ International Agreements Committee issued its 9th Report, which considers the UK-Switzerland Agreement on the Mutual Recognition of Financial Services.

The Agreement, which was signed on 21 December 2023 and laid before Parliament on 13 March 2024, aims to facilitate cross-border trade in wholesale financial services. This is achieved by each country recognising the regulatory and supervisory regimes of the other as achieving equivalent outcomes to their own. The Agreement establishes structures for regulatory cooperation, consolidates existing access allowed under current domestic legislation, and in some sectors creates additional market access by ‘deferring’ to the rules of the other country, to ease cross-border trade. The Committee notes that this creates particular benefits for the UK insurance sector.

The Committee also concludes that the Agreement contains novel and ambitious commitments, representing a ‘new approach to trade in wholesale financial services’.  As such, the Committee encourages scoping exercises to contribute to the consideration of the expansion of its scope, as provided for in the Agreement, giving the examples of sustainable finance and new financial market infrastructures. The Committee calls on the Government to continue to engage with industry on appropriate expansions.

The Report highlights that the Committee regards the Agreement as exemplar for relations with other countries with similarly sophisticated financial markets and, while it acknowledges the challenges of concluding such an agreement, it considers that it should remain the UK’s objective to pursue this approach with markets such as the EU, US and Japan.

The Committee also calls on the Government to make full use of the recently established Memorandum of Understanding on financial services cooperation with the EU, and to examine other pathways to lowering regulatory barriers to trade in financial services with suitable partners at a bilateral and multilateral level.