Mutual Recognition - A basis for market access after Brexit
11 April 2017
Industries: Financial Institutions
Jurisdictions: United Kingdom
Services: Financial Services, International Trade and Investment
Hogan Lovells has assisted The International Regulatory Strategy Group (IRSG), a regulatory advisory group to the financial and professional services sector, to develop a framework for EU market access as Government embarks on Brexit negotiations.
The framework proposes how the UK and EU could agree reciprocal market access in financial and professional services as part of its new relationship post-Brexit. The model would be based on mutual recognition of each other’s regulatory and supervisory regimes, enabling firms based in the UK to continue trading services across the EU and vice versa, with minimal disruption to their customers.
The IRSG's regulatory coherence workstream developed this paper, with research and legal support provided by Hogan Lovells.
The paper, Mutual recognition – a basis for Market Access after Brexit, outlines possible criteria for access, the mechanisms for maintaining regulatory alignment, and how possible disputes between the UK and EU in relation to access could be resolved.
The paper concludes:
- Criteria for access: Where global standards exist, and are robust and detailed, the criteria for access should be based on these. These could include those set by the Basel Committee on Banking Standards, International Organisation of Securities Commissions (IOSCO) and the Financial Stability Board (FSB).
- Mechanisms for dialogue: A joint UK-EU committee or forum could be established to make sure that regulation and principles of supervision are monitored as they evolve over time. It should also assess the impact of divergences, for example consulting on new legislation before it would be brought into effect.
- Dispute resolution model: If the members of the new committee fail to agree on impact of divergences, a dispute resolution model would be necessary to deal with disputes between the UK and EU. This report sets out a range of models for dispute resolution mechanisms which already exist in free trade agreements or other arrangements. But the report suggests that an entirely new model might equally be developed. These disputes could be referred to a new independent panel, made up of global standards setters (such as the FSB or IOSCO) or a new panel of experts predominantly from outside the UK and EU.
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