The uk-eu relationship in financial services

Explaining the lack of EU equivalence decisions
80. We sought the views of witnesses on possible explanations for the lack of 
EU equivalence decisions to the UK. There was a broad consensus that, 
compared to its equivalence processes for other jurisdictions, the EU was 
“holding the UK to a higher standard”.
105
Sir Jon Cunliffe explained: “The 
Commission have said that further equivalence decisions would not just 
consider current regulation in the UK—which largely mirrors the EU—but 
also future plans. This a standard that we are not aware of them holding any 
other country to.”
106
Similarly, Miles Celic expressed the view that many 
of the EU’s equivalence decisions with other third countries “represent a 
different time in regulatory dialogue between the European Union and its 
partners”, and that the EU “now see equivalence as a process of managing 
future and ongoing alignment”.
107
81. We heard that this differential treatment could be partially explained by the 
UK’s size, proximity, and the high trade volumes between the two parties. 
Sam Woods emphasised that, for the EU, the UK represents “a very large 
financial services centre right on the edge of its jurisdiction”.
108
Andrew 
Pilgrim of EY agreed: “the European Commission does think about the UK 
differently from other markets … [equivalence decisions] for a jurisdiction a 
long way away, where it expects occasional trade, are a very different kettle 
of fish”.
109
82. The Committee also heard that the EU’s decision-making over equivalence 
for the UK could be attributed to its broader push for what it calls “open 
strategic autonomy”.
110
In the view of Dr Georgosouli and Prof Lastra:
“The reluctance of the Commission to grant equivalence may appear at 
odds with the fact that almost all of the UK financial regulation stems 
from existing EU legal instruments but, it is fully consistent with the 
EU’s future plans to become strategically autonomous and to increase 
its own international competitiveness.”
111
103 
Q 97
104 The European Commission’s latest published table of equivalence decisions, dated February 2021, puts 
these numbers at 21, 15 and 13 respectively. However, Sir Jon Cunliffe highlighted to the Committee 
his understanding that the Commission issued one further decision to each of these three countries in 
October 2021. European Commission, ‘Equivalence Decisions taken by the European Commission as 
of 10 February 2021’: 
https://ec.europa.eu/info/sites/default/files/business_economy_euro/banking_
and_finance/documents/overview-table-equivalence-decisions_en.pdf
 [accessed 9 June 2022] and 
supplementary written evidence from Sir Jon Cunliffe (
RFS0012
)
105 
Q58
(Sam Woods)
106 Supplementary written evidence from Sir Jon Cunliffe (
RFS0012
); see also 
Q 58
(Sam Woods).
107 
Q 10
108 
Q 58
; see also 
Q 31
 (Sir Jon Cunliffe).
109 
Q 44
110 
Q 82
 (Stéphane Boujnah)
111 Written evidence from Dr Andromachi Georgosouli and Prof Rosa Maria Lastra (
RFS0010
)

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THE UK-EU RELATIONSHIP IN FINANCIAL SERVICES
83. More broadly, several witnesses suggested that the lack of equivalence 
decisions reflected political rather than purely technical considerations on 
the part of the EU. Miles Celic said “there was no technical reason … why 
the UK should not be deemed equivalent”, but added, “there has always 
been a degree of politicisation to equivalence”.
112
UK Finance stressed that 
“the UK rulebook is substantively closer to the EU rulebook than those of 
other jurisdictions”.
113
Lord Hill’s assessment was blunter: “They think that 
an equivalence decision is a plum to give, and why would you give that before 
you know you want to give it and in exchange for something else?”
114
84. There have been suggestions that the EU’s withholding of equivalence 
decisions is linked to wider disagreements between the Parties. In June 
2021, Commissioner McGuinness suggested that the EU’s financial services 
equivalence assessments regarding the UK could be resumed once the 
Memorandum of Understanding on UK-EU regulatory cooperation was 
finalised, which in turn was linked to the UK “abiding by its obligations and 
engaging in good faith” in other areas of the relationship (see Chapter 3).
115
85. In this context, several witnesses said they did not expect that further 
equivalence decisions would be forthcoming.
116
Lord Hill told the Committee 
that he had not expected it since the referendum: “I spent a lot of time after 
2016 saying to people in the City, ‘I promise you, you are not going to get 
equivalence’”.
117
Caroline Dawson of Clifford Chance, however, was slightly 
more optimistic, arguing that the lack of decisions to date was partly because 
“equivalence decisions take a really long time”, and suggested that further 
decisions might be forthcoming once “the UK financial system stabilises 
and the EU gets more confidence that we are not going to see a complete 
bonfire of red tape”.
118
86. The Economic Secretary’s evidence to the Committee reinforced the 
unilateral nature of EU equivalence decisions: “I cannot account for what 
the EU has decided to do with respect to us. That is a matter for it. It is 
obviously sovereign to make those decisions itself”.
119
He also argued that the 
UK could not operate on the assumption that further equivalence decisions 
would be granted: “The question of equivalence will always be there, and we 
will always be open to discussing whatever the EU wants to discuss, but I am 
not sitting waiting for that decision.”
120