The uk-eu relationship in financial services

Equivalence
A notable dimension of the current UK-EU relationship in financial services 
is the absence of EU equivalence decisions. This is particularly striking when 
set against the EU’s approach to other third countries (as well as the UK’s own 
approach to equivalence vis-à-vis the EU). The Committee found a consensus 
among its witnesses that this approach by the EU is political rather than technical 
and that the UK is being held to a higher standard than other countries.
Some of the missing equivalence decisions would be mutually beneficial for 
the UK-EU trading relationship in financial services. But the sector does not 
seem to view either the general lack of equivalence decisions or the competitive 
imbalance compared to other third countries as a matter of fundamental 
concern. Moreover, as equivalence decisions are unilateral in nature, the 
Government’s ability to rectify the absence of EU decisions is limited. The 
Committee concludes that it would be unwise for the Government to base its 
strategy for financial services on a process that it cannot control, and which 
currently seems unlikely to bear fruit.
Regulatory cooperation
The UK and the EU committed, alongside the TCA, to a Memorandum 
of Understanding (MoU) on regulatory cooperation, yet this has still not 
been signed or entered into force. The Committee regrets this and notes the 
widespread view that the MoU has become a casualty of wider tensions between 
the Parties. As with equivalence, comparisons with other third countries are 

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THE UK-EU RELATIONSHIP IN FINANCIAL SERVICES
striking; both the UK and the EU have mechanisms for regulatory cooperation 
with the USA that they do not have with each other.
The Committee acknowledges that the lack of the MoU does not appear to have 
caused major problems so far, particularly as a series of other MoUs for technical 
cooperation between regulators are in place. Nevertheless, the Committee 
believes that the MoU would still have value as a mechanism for strategic 
dialogue. We therefore caution the Government against complacency in this 
area. We also call on the Government to step up its political and diplomatic 
financial services engagement with the EU.