UK and EU move closer to pact on post-Brexit financial regulation

City of London's unfettered access to Europe was largely cut off when UK left the bloc

A street near the Bank of England in the City of London. Bloomberg

The UK and EU have taken a “significant step” towards closer post-Brexit ties on financial services regulation, a Treasury minister has said.

The European Commission and the UK have published a draft agreement on regulatory co-operation in the sector.

The British financial sector’s previously unfettered access to the EU was largely cut off after Brexit.

The agreement on how financial regulators on both sides would communicate after the UK’s exit from the bloc was initially expected in 2021.

It was stalled amid the long-running dispute between the UK and EU over Northern Ireland trading arrangements, but was unlocked by the Windsor Framework struck by London and Brussels earlier this year.

The deal still needs political endorsement from EU states, but “thereafter HM Treasury and the European Commission intend to sign the MoU [memorandum of understanding] shortly”, the Treasury said.

“This is just the first yet significant step towards a more constructive financial services relationship between the UK and the EU – one that is built upon mutual benefit and in the spirit of co-operation,” City of London minister Andrew Griffith said.

“Our financial markets are deeply interconnected and this framework will mean we can engage with our partners in the EU, much as we do with other major partners like the US.”

The European Commission on Wednesday adopted the draft agreement.

It commits the two sides to “jointly endeavour to pursue a robust and ambitious bilateral regulatory co-operation in the area of financial services”.

“The Windsor Framework allowed the EU and the UK to open a new chapter in our partnership based on a spirit of mutual trust and co-operation,” said Mairead McGuinness, the EU’s financial services commissioner.

“I am confident that our relationship and future engagement in financial services will be built on a shared commitment to preserve financial stability, market integrity, and the protection of consumers and investors.”