The uk-eu relationship in financial services

The Committee acknowledges that the non-implementation of the 
Memorandum of Understanding does not appear to have posed major 
practical problems to date, particularly as it is a tool for political 
cooperation rather than something that, in itself, facilitates market 
access. However, the Memorandum of Understanding would provide 
a useful mechanism and structure for future strategic dialogue 
and cooperation between the UK and the EU, and the Committee 
considers that its implementation would benefit both sides.
125. 
We caution the Government against complacency in this area. Despite 
the limited impact of the non-finalisation of the Memorandum of 
Understanding to date, its real value is likely to be found in the future 
as the UK and the EU diverge, particularly in the event of cross border 
financial services developments and potential future crises that may 
require transnational solutions.
Bilateral and multilateral cooperation between regulators
126. Separately to the UK-EU MoU, a separate series of bilateral MoUs are in 
place between UK regulators and supervisors and their counterparts in the 
EU institutions and Member States. The FCA, for example, has agreed 
bilateral MoUs with the European Banking Authority and the European 
Securities and Markets Authority; a multilateral MoU with EU and EEA 
National Competent Authorities; and individual MoUs with National 
Competent Authorities.
165
Edwin Schooling Latter, Director of Markets and 
Wholesale Policy at the FCA, described this as “a pretty complete tapestry 
of MoUs”, while Andrew Pilgrim said it was “a huge network of MoUs … 
almost a clean sweep”.
127. Witnesses to this inquiry, including the regulators themselves, explained 
that these lower-level MoUs facilitate regulator-to-regulator dialogue on a 
technical level, whereas the overarching MoU would facilitate higher-level 
strategic discussions between the Treasury and the Commission.
166
128. These regulator-to-regulator MoUs are in place and, according to the UK 
regulators, are working well. Edwin Schooling Latter said that these fora had 
facilitated “a lot of really important conversations with our EU counterparts 
about issues of common concern”, including recent cooperation on sanctions 
against the Russian Federation following the invasion of Ukraine. Nathanaël 
Benjamin, Executive Director for Authorisations, Regulatory Technology, 
and International Supervision at the PRA added, “We almost forget that 
163 
Q 69
164 
Q 102
165 Financial Conduct Authority, ‘MoUs with European authorities in the areas of securities, investment 
services and asset management, insurance and pensions, and banking’ (4 January 2021): 
https://
www.fca.org.uk/news/statements/mous-european-authorities-securities-insurance-pensions-banking
[accessed 7 June 2022]
166 
Q 50
(Sam Woods, Richard Fox) and 
Q 40
 (Caroline Dawson)

---

34
THE UK-EU RELATIONSHIP IN FINANCIAL SERVICES
the MoUs are in place because we have got into a mode of interacting quite 
openly, regularly and constructively with our counterparts”.
167
129. Several witnesses argued that, at a technical and day-to-day level, these MoUs 
were of greater significance for regulators and firms than the overarching 
MoU between the UK and the EU. Caroline Dawson of Clifford Chance 
said, “From my clients’ perspective, their relationships are with their direct 
supervisors and regulators … Those are the MoUs that probably have 
the most direct impact on my clients’ business”.
168
For the FCA, Richard 
Fox told the Committee that “the more important set of relationships we 
have is arguably with our direct counterparts doing the regulation and 
the supervision in the different countries across the European Union and, 
indeed, with the number of authorities that span the European Union.”
169
130.