No free pass for UK banks in EU, says withdrawal deal

Sarah Collins
'Equivalence' on trade was described by Chancellor Philip Hammond this month as “wholly inadequate for the scale and complexity of UK-EU financial services

Banks will not have a free pass to trade across the EU post-Brexit under new draft guidelines on future relations between the bloc and the UK.

Britain and the EU yesterday agreed a “large part” of the draft deal that will lead to an “orderly withdrawal”.

But an annex to it says that any new regime for financial services should be based on “equivalence” of individual rules, rather than the Government’s preferred option of wide-ranging “mutual recognition” of each other’s regulatory systems.

Equivalence is a one-off decision by EU authorities on whether a service or product is acceptable inside the bloc. It involves lengthy technical assessments and final approval by member states.

Equivalence has been deployed for several countries, including the US, in areas such as audit and derivatives trading venues.

It falls far short of allowing banks a “passport” to trade across the EU and was described by Chancellor Philip Hammond this month as “wholly inadequate for the scale and complexity of the UK-EU financial services trade”.

According to the draft text, obtained by Bloomberg, “the aim should be reviewed and improved equivalence mechanisms”.

It is not clear what “improved” would mean, but EU officials insist it would be nowhere near the freedom the UK currently enjoys.

The text states the new regime should allow “appropriate access to financial services markets, while preserving financial stability, the integrity of the single market and the autonomy of decision making in the European Union”. It is still to be signed off by EU leaders, who will meet at a summit on Friday,

Tory Brexiteer Jacob Rees-Mogg has denied reports he was planning to throw fish into the Thames near Parliament in protest at delays in leaving the Common Fisheries Policy.

Mr Rees-Mogg told LBC radio: “I’m not throwing fish. I have a nasty feeling they would be brought back in the wind and hit me in the face.”