BRUSSELS/LONDON (Reuters) – Britain wants binding commitments from the European Union on financial market access to avoid the country’s finance industry suddenly being cut off from the bloc, a request Brussels has rejected, EU officials and diplomats said.
Britain left the EU in January and a transition period ends in December, when future access for banks, insurers and asset managers will be based on “equivalence,” a limited form of access used by the United States, Japan and Singapore.
Brussels grants market access to any “third country” if it deems its rules are equivalent or as robust as those in the EU.
But Britain wants special treatment to ensure its finance industry has more predictable access to the EU, which is Britain’s biggest financial services export market, worth about 26 billion pounds ($32.58 billion) annually.
“The UK is seeking co-management of financial equivalence decisions,” an EU diplomat said on Tuesday.
“They want an in-built consultation process so that unilateral revoking of any licences would not be as easy as it is for third countries currently,” the person said.
The European Commission, which is negotiating with Britain on behalf of the 27 EU countries, has rejected the idea, the person said.
An EU official said Britain wanted “binding joint procedures for withdrawing equivalence.”
Broader UK-EU trade talks have continued this week with clashes over fishing rights, an industry that employs around 8,000 people in Britain, compared with more than a million in finance, based on data from finance industry body TheCityUK.
Under the EU’s current system, Brussels can withdraw equivalence with 30 days’ notice and Britain wants a much longer notice period.
The EU says granting and revoking equivalence is a unilateral decision and some EU lawmakers want to toughen up the process by adding a monitoring system.
“We need to ensure that equivalence is not only in place on the day of separation, but remains in place for the long run,” senior EU lawmaker Markus Ferber said on Tuesday.
The political declaration on the shape of future trade relations signed by London and Brussels last year said each side would be autonomous in financial regulation.
“The EU has always said equivalence is 100% their competence and the third country has no say, so giving the UK regulators any degree of input would be a shift,” a senior official at an international bank said.
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