Valdis Dombrovskis said the European Commission would remain eagle-eyed in ensuring that British rules comply with the EU’s own standards for protecting consumers and guaranteeing financial stability. The Brussels bureaucrat said the bloc is willing to allow UK across through an “equivalence” system that are used by bankers and brokers in countries such as the US and Singapore. Mr Dombrovskis told the FT that Britain’s access will depend on “not starting to engage in some kind of deregulation”.
“The more systemically important the market is for the EU, the more we import potential risks and the closer regulatory alignment that is expected,” he added.
Britain will have to rely on temporary measures after Brussels rejected the possibility of a permanent access deal for financial services as part of the Brexit negotiations.
The EU has around 40 different equivalence provisions across its financial services laws.
They cover areas such as allowing EU companies to use clearing houses and exchanges based outside the bloc, and allowing non-EU brokerages to offer trading services throughout the bloc.
The provisions are used by more than 30 countries, and Brussels has declared that Britain will be expected to use them after Brexit.
Equivalence is used by firms in the United States, Singapore and Japan but was not designed for a global financial hub on the EU’s doorstep.
Mr Dombrovskis hinted that “it should be overly difficult” for Britain to qualify for equivalence after Brexit.
This is because “currently the UK is applying EU financial sector legislation”, he added.
But he warned that if a country “is either diverging from EU legislation, or not following up EU legislation, in this case the equivalence determination can also be withdrawn”.
He said: “It means that the UK should stay closely aligned with the EU.”
Brussels has recently withdrawn equivalence provisions from several countries’ credit-ratings agencies because their laws had not kept aligned to Brussels rule making.
Last summer the EU Commission removed the rights for Canada, Brazil, Singapore, Argentina and Australia.
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Speaking at the Guildhall in London on November 15, Mr Dombrovskis said, “I intend to propose to renew this time-limited equivalence decision beyond that date, to prepare for any eventuality.”
The City of London Corporation, which represents UK financiers, welcomed the news.
A statement said it “would help to remove the immediate rise of disruption to EU clearing services” and that it gave the two sides “much-needed breathing space to work through the complex issues that remain”.