The uk-eu relationship in financial services

The UK-EU relationship in 
financial services
ChAPTER 1: 
INTRODUCTION
This inquiry
1. In January 2021, the predecessor to this Committee, the House of Lords 
European Union Committee, launched a coordinated series of inquiries, 
culminating in reports analysing the UK-EU Trade and Cooperation 
Agreement (TCA) and its implications for the future of UK-EU relations. 
Among these was a report by the former EU Services Sub-Committee, titled 
‘Beyond Brexit: Trade in Services’, which concerned trade in services and 
connected issues between January and March 2021.
1
That report included a 
chapter covering matters related to financial services.
2. This report is based on an inquiry undertaken by the European Affairs 
Committee, whose Members are listed in Appendix 1, between February 
and April 2022.
3. The scope of the inquiry included the impact so far on the UK financial 
services sector of the UK’s exit from the Single Market; the impact of the 
absence of a functioning framework for UK-EU regulatory cooperation; the 
future of cross-border financial services in the absence of equivalence; and 
the impact of regulatory divergence and agreements with third countries on 
UK-EU financial services trade. The future of the insurance sector and the 
Government’s proposed reforms to Solvency II fell outside the formal scope 
of this inquiry but have been mentioned where a failure to do so would result 
in an incomplete analysis of the facts at hand.
4. The inquiry involved six oral evidence sessions with experts, industry 
representatives and representatives of UK financial services regulators and 
the Bank of England between 8 February and 5 April 2022; an oral evidence 
session with the Economic Secretary to the Treasury and City Minister, 
John Glen MP, on 26 April 2022; and 12 written evidence submissions. We 
are grateful to all our witnesses, who are listed in Appendix 2.
5. This report is divided into five chapters, first setting out the general 
background to the financial services sector and how it has been affected 
by the UK’s exit from the EU, before examining equivalence, regulatory 
cooperation, regulatory reform and divergence, and future opportunities for 
the sector outside the EU.
6. To assist the Committee with this inquiry, and to provide the expertise 
necessary for the questioning of witnesses and the drafting of this report and 
its conclusions and recommendations, the Committee was pleased to appoint 
Professor Sarah Hall, Professor of Economic Geography in the Faculty of 
Social Sciences at the University of Nottingham, and a Fellow of UK in 
a Changing Europe as specialist adviser to the inquiry. The Committee is 
grateful to Prof Hall for her service.
1 
European Union Committee, 
Beyond Brexit: trade in services
 (23rd Report, Session 2019–21, HL Paper 
248) 

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THE UK-EU RELATIONSHIP IN FINANCIAL SERVICES