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18 July 2019

Bloomberg: There’s no such thing as free access, EU to warn UK on banks

The UK should expect a “rigorous” assessment of its regulations before financial firms will be allowed to do business in the European Union after Brexit, according to a draft document to be presented by officials in Brussels later this month.

The European Commission, the EU’s executive arm, is set to lay out its most recent approach to the so-called equivalence system, which allows foreign financial firms to do business in the bloc if regulations in their home country are deemed tough enough. Officials have made it clear that this system is all that’s on offer for the City of London after the U.K.’s departure.

“The determination of the equivalence of a third-country regime results from a rigorous case-by-case assessment,” according to the document. Without mentioning the U.K. by name, it said that “high-impact” countries with tighter links to the EU’s financial system “present a more significant set of risks which the commission will need to address.”

Sam Woods, the top banking regulator at the Bank of England, has said that a “British style” of oversight with less detailed legislation and more flexibility granted to regulators could improve the system. But that approach could be at odds with keeping firms’ access to the EU if Brussels finds that the U.K. has drifted too far from the bloc’s regulations after Brexit.

The European Commission declined to comment on the document.

In the draft, the commission also highlights the need to monitor foreign rules continuously, and the fact it can suspend or withdraw equivalence decisions as necessary. [...]

Full article on Bloomberg

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