Post-Brexit a landmark move, the United Kingdom and Switzerland have inked a pioneering post-Brexit financial services deal, aimed at fostering closer ties between two of Europe’s major banking hubs. British Finance Minister Jeremy Hunt hailed the agreement, named the Bern Financial Services Agreement, as a significant win for post-Brexit Britain. The deal is poised to set a precedent, offering a blueprint for future financial agreements with other nations.
1. The Unique Accord: A First-of-Its-Kind Deal
British Finance Minister Jeremy Hunt, during a press conference in Bern, Switzerland, labeled the financial services deal as “first-of-its-kind.” Hunt emphasized that such an agreement, mutually beneficial to both the UK and Switzerland, would have been challenging to achieve within the confines of the European Union. The accord, based on mutual recognition, is a pioneering effort in post-Brexit financial cooperation.
2. The Bern Financial Services Agreement: A Blueprint for the Future
Hunt emphasized that the Bern Financial Services Agreement serves as a blueprint for future deals with other nations. The deal focuses on streamlining business ties, fostering collaboration between financial firms, and enhancing cross-border access to a range of financial services, including those provided by banks, insurers, and asset managers.
The Deference Model: Simplifying Cross-Border Operations
The agreement follows a deference model, allowing firms to operate in the partner country while adhering to a single set of regulations. Financial services providers and insurers can engage in certain cross-border activities without the necessity of establishing a local base. This approach aims to simplify operations and facilitate smoother business interactions between the UK and Switzerland.
Impact on Financial Services Providers
Financial services providers and insurers will benefit from the ability to offer specific cross-border activities in both Switzerland and the UK, enhancing their operational flexibility. The terms also enable Swiss firms to serve wealthy individuals within the UK, mirroring privileges currently enjoyed by British firms in Switzerland.
Advisors’ Flexibility and Market Boost
The agreement allows UK advisors to “temporarily serve” wealthy clients in Switzerland without the need for immediate registration. This flexibility is expected to facilitate business interactions and contribute to the overall growth of the financial services sector.
3. A Boost for the City of London: A Light-Touch Approach
Describing the plans as a “light-touch, progressive, future-leaning way of opening access,” Hunt highlighted the potential positive impact on the City of London. The deal is anticipated to provide a significant boost to the financial hub, positioning it favorably in the post-Brexit era.
Future Extensions: Inclusion of Retail and Sustainable Finance
Hunt hinted at the possibility of extending the deal to include retail and sustainable finance in the future. The agreement’s adaptable framework allows for potential expansions, aligning with evolving trends in the financial services industry.
4. Parliamentary Approval and Optimistic Outlook
While the deal must undergo approval by the parliaments of both countries before taking effect next year, commentators are optimistic. Some believe that this agreement marks an improvement on the equivalence framework the UK had with Switzerland while being part of the European Union.
Broader Implications: Leverage in Financial Services
David Henig, U.K. director at the European Centre for International Political Economy, termed the deal as “broadly good news.” He emphasized that the agreement leverages Britain’s significant influence in the realm of financial services.
Conclusion: A Milestone in Post-Brexit Financial Cooperation
The UK-Switzerland financial services deal stands as a milestone in the post-Brexit landscape, showcasing the potential for collaboration beyond the European Union. As both countries navigate the complexities of their evolving financial ecosystems, this agreement sets a precedent for future international financial collaborations.