The E.U. has warned that it won’t go easy on the U.K.’s market access after Brexit. The financial services chief said oversight of “equivalence” rules will be stepped up.
Accessing the E.U. Market
The E.U. financial services chief, Valdis Dombrovskis, has warned that the European Union will use strict oversight over the United Kingdom’s rights of access to the bloc’s market after the withdrawal next year. Dombrovskis said he was open to proposals the U.K. is willing to make to establish market access for the City of London within the bloc’s “equivalence” rules.
However, he also stated that the U.K. should not take its access to the market for granted. The E.U. will strengthen its assessments of whether the conditions are being met by the countries. Brussels’ equivalence rules are meant to simplify operations for non-E.U. financial institutions within the single market, provided the European Commission determines that the country where the company is based has financial regulations that match the E.U.’s strictness.
No Super Equivalence
Dombrovskis stated that the U.K. would not be offered any form of “super equivalence.” Moreover, any assessments regarding the United Kingdom’s qualifications would be conducted individually, “sector by sector and legislation by legislation.”
He also stated that the E.U. was moving forward with measures to police equivalence access. Its oversight reinforcement would involve even stronger requirements for the financial supervisors of various countries to share data with the European Union. There will also be an increase in the monitoring to be certain that countries continue to comply with the regulations over time.
“We see that there is a need to strengthen systemic monitoring of continued compliance,” he said. “So this is one area where we will come with a more systematic approach.”
A number of officials in the European Union have privately assumed that the United Kingdom would not struggle to solidify equivalence rights after exiting the single market. After all, even before Brexit, the U.K. is already applying the E.U. regulations. This, assuming that it doesn’t make any large changes to its own rules or the supervision it applies to ensure compliance.
That said, the statement made by Dombrovskis indicates that the E.U. is seeking to stop regulatory undercutting from occurring which could give an advantage to companies based in the City of London a competitive advantage over businesses located in E.U. member states.