By Robert Lloyd and Philip Morgan
On 27 June 2023, the UK and the EU Commission entered into a memorandum of understanding (MoU) on regulatory cooperation in financial services triggered, it seems, by the agreement of revised arrangements on Northern Ireland. You could be forgiven for thinking that the MoU was agreed a long time ago – accordingly to a nonbinding joint declaration between the EU and the UK, the targeted date was 31 March 2021. At the end of the Brexit transition period on 31 December 2020 few people would have expected that it would take the best part of two and a half years to reach this modest objective.
Now that the MoU is finally in existence, will it bring about any practical changes from an industry perspective?
The first point is that, on its own, it will not change anything. It simply creates an administrative framework (including a semi-annual Joint EU-UK Financial Regulatory Forum) for voluntary regulatory cooperation and discussion. It does not, for example, deal with mutual market access issues, or prejudge the adoption of equivalence decisions. The UK and EU retain complete discretion over their own rules.
In 2021, our hopes that the MoU would precipitate any significant decisions were fairly muted (see our 2021 alert on this here). This remains the case, although some degree of optimism may be appropriate, in particular given the passage of time since Brexit and some thawing of relations. It seems clear at least that the UK wishes to make the most of the opportunity – the Government has said publicly that it “looks forward to holding the first meeting of the Forum which is created by the MoU as soon as possible”. The EU, meanwhile, appears to have agreed to a first meeting “this Autumn”, which does not seem to be a particularly aggressive timetable.