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Thursday, 8 February 2018

EU Warns Firms To Act On Loss Of Financial Services Passports

The European Union has today warned financial services firms that rely on EU passports to make alternative arrangements ahead of Brexit. Separate warnings were made to ratings agencies, investment firms, insurers and reinsurersbanks and payment services firms, auditors, providers of post-trade services (settlement and clearing), and asset management. Warnings were also issued to participants in other pan-EU licensing schemes.

This is nothing new, as explained previously, and many firms have already activated their plans to move EEA-facing operations into one of the 27 remaining EU member states.

The warning is timely, however, in case any firms are distracted by UK government "assurances" concerning potential free trade arrangements following previous EU warnings in December, which the UK government has conceded the EU is legally entitled to issue. 

Such deals do not usually deal very extensively with services, and 'most favoured nations' obligations in existing EU trade deals with third countries mean that it is very unlikely that the EU will wish to - or realistically be able to - set any kind of precedent in a deal with the UK.

The UK government's insistence on the leaving the single market and the customs union effectively rules out the UK remaining a member of the EEA (like Norway). That means the only alternative to Brexit is remaining a member of the EU.