Eversheds Sutherland Financial Services Brexit Round Up week commencing 9 July

By Andrew Henderson | Michaela Walker

Over the last week the UK cabinet has concluded its negotiations with itself in respect to what kind of deal it is going to seek with the EU, a deal which, in the words of HMG, has “evolved” since the Prime Minister’s Mansion House speech¹. We have seen a brief summary of the terms, but not the much delayed White Paper (which is expected on Thursday 12 July) and this has led to, at the time of writing, three ministerial resignations.

HMG statement following the Cabinet discussions at Chequers on 6 July
The Chequers statement makes two brief references to financial services. It is unclear whether, just as HMG’s position on goods and the Facilitated Customs Partnership has evolved from where it was when the Prime Minister gave her Mansion House speech, whether HMG’s position on services has also evolved. With so little to go on, we can’t be certain, but there seems to be a change of tone from the recent more strident demands for mutual recognition from the Chancellor, Bank of England and FCA².

The statement says:

Para 4a
“We would strike different arrangements for services, where it is in our interests to have regulatory flexibility, recognising the UK and the EU will not have current levels of access to each other’s markets.”

and

Para 6b
“[the position we reached today would: … provide regulatory flexibility where it matters most for the UK’s services-based economy, and where the potential trading opportunities outside of the EU are the largest, recognising that the UK and the EU will not have current level of access to each other’s markets – with arrangements on financial services that preserve the mutual benefits of integrated markets and protect financial stability, noting that these could not replicate the EU’s passporting regimes;”

On their own, these statements are less ambitious for our future trading relationship for financial services than previously set out by the Prime Minister and the Chancellor and do not mention the mutual recognition of financial services standards that has underpinned HMG’s negotiating position to date. Whether or not this reflects an evolution in HMG’s position or is just a difference in phrasing the prior position, we will have to wait and see.

To read the HMG statement, click here.

To read the prime Minister’s summary of the matters contained in the statement, click here.

Resignation letters of David Davis, Steve Baker and Boris Johnson and the PM’s replies
At the time of writing we have the resignation letters of David Davis (as Secretary of State for Exiting the EU) and Steve Baker (as Minister for Exiting the EU) along with the Prime Minister’s replies and, on its own, Boris Johnson’s resignation letter drafted in his usual colourful language. None of these resignation letters have anything to say about financial services, but are included for interest.

To read David Davis’ resignation letter, click here.

To read Steve Baker’s resignation letter, click here.

To read Boris Johnson’s resignation letter, click here.

Martin Howe QC’s reaction to the Chequers statement
Martin Howe QC is Chairman of Lawyers for Brexit and a prominent Conservative campaigner for Brexit. As such his legal briefings are influential and widely read amongst Eurosceptic ministers and backbenchers. Setting aside the political points that Howe makes (Eversheds Sutherland remains neutral on the political aspects of Brexit), he raises a number of legal concerns about the proposals in the Chequers statement that will need to be addressed, hopefully in the forthcoming White Paper.

To read Martin Howe’s reaction, click here.

Robin Walker, Minister in DExEU, speech on mutual recognition of professional qualifications (“MRPQ”)
Walker is a junior Minister at DExEU with the professional qualifications brief. In seeking a continuation of MRPQ, the UK should be pushing at an open door. Since 1997 the UK has recognised 142,000 EU professional qualifications, while the EU has recognised only 27,000 UK qualifications. The Commission included mutual recognition of professional qualifications during the Transitional Period in its first draft of the Withdrawal Agreement, at Article 25. This Article has been agreed by the UK and EU negotiators and is subject only to technical amendments³.

As long as there is a Relationship Agreement, it is highly that MRPQ will be in it.

Speaking to industry representatives, Walker said:

“Encouragingly, this is an objective that is shared by the EU and one that is reflected in their own guidelines for the future relationship, where they refer to “ambitious provisions” for MRPQ.”

“An ambitious agreement on the mutual recognition of professional qualifications will mean for example, UK architects can continue to design buildings in Paris, or Berlin.

“That lawyers right across the EU27 can continue advising clients in the UK and that enormous international expertise and value of UK law is available to EU citizens and companies in their international dealings.”

“This next stage of negotiations will also include discussion of topics such as the ability of professionals to provide services on a fly-in fly-out basis.

“We will be outlining our position for the future economic partnership in the forthcoming White Paper. This will offer detailed, precise and ambitious explanations of the UK’s position on our future relationship with the EU and I would welcome your views from all the professional bodies around this table following its publication next week.”

To read the Minister’s speech, click here.

Naturally, Eversheds Sutherland are taking steps to ensure that we are able to continue to provide our clients with high quality legal advice regardless of the outcome of the Brexit negotiations, including in the event of a no deal Brexit at the end of March 2019.

We have capacity to advise on Financial Services law in London, Luxembourg and Dublin, where Deborah Hutton recently joined the firm.

LSE applies for Dutch trading licences in case of hard Brexit
Describing its contingency planning for a no deal Brexit or a Brexit in which there is no deal on financial services at the end of the implementation period, the London Stock Exchange said:

“We can confirm that as part of our contingency planning for a hard Brexit scenario, Turquoise, TRADEcho and UnaVista have applied for a select number of additional licences to continue to offer their services to EU-27 customers from Amsterdam.”

To read the Reuters article, click here.

1. To read the Prime Minister’s Mansion House speech, click here.
2. For further details of this more strident approach, see the last two articles in our last Financial Services Brexit Round Up for the week ending 29 June, click here.
3. To read the Withdrawal Agreement with colour coding showing what wording has been agreed, click here.

Compliments of Eversheds Sutherland, a member of the EACCNY