PIMFA Comments on Agreed Draft Political Declaration
23rd November 2018
The UK and EU have agreed a draft text of the Political Declaration on the UK’s future relationship with the bloc. The draft statement sets out the framework for the future UK-EU relationship which will be negotiated once the UK leaves the EU on 29th March 2019. The Declaration, which comprises 26 pages, accompanies the Withdrawal Agreement which the UK government, but not Parliament, endorsed on 14th November 2018.
While some elements of the document are still under negotiation, it is expected that these will be finalised in time for the European Council Summit to adopt both the Withdrawal Agreement and the Political Declaration on Sunday 25th November 2018.
The section of the draft text of the Political Declaration on financial services is limited. It confirms both parties’ commitment to preserve financial stability, market integrity, investor and consumer protection and fair competition. However, there is no indication that the equivalence regime, on which the future market access for both UK and EU financial services will be based, will be extended beyond its current limited scope. In particular, the current documentation does not suggest that it will be expanded to include the retail sector area.
It is encouraging, however, to see stronger language on future regulatory cooperation, including:
- slightly stronger wording on cooperation between UK and EU on regulatory and supervisory matters in international bodies;
- suggestion that UK and EU should start the equivalence assessment as soon as the UK leaves the EU.
- intention of both the UK and EU to keep respective equivalence framework under review;
- suggestion that the arbitration around equivalence decisions will be subject to greater consultation between the EU and UK than currently exists for third countries.
The inclusion of greater consultation and transparency in making equivalence decisions has the potential to change the nature of the regime, if not to include retail, at least to be better managed in regulatory rather than political interests. In its current form, equivalence decisions are made unilaterally by the European Commission and can be revoked at only 30 days’ notice. Balancing autonomy over equivalence decisions with consultation and transparency will be key in achieving a sound foundation for the future UK-EU cooperation in the financial services sector.
The Withdrawal Agreement and the Political Declaration deliver the transition period which is important for PIMFA members and which we have consistently argued for. Should the UK Parliament adopt both documents, firms will have more time to prepare for the loss of passporting and for accessing EU markets under the Third Country regime. However, it is still possible that the UK will leave the EU without a deal on 29th March 2018 and it therefore remains important that PIMFA members prepare for such an outcome.
The full draft text of the Political Declaration can be accessed here.
Notes for Editors
About PIMFA – the Personal Investment Management & Financial Advice Association
- PIMFA is the trade association for firms that provide investment management and financial advice to everyone from individuals and families to charities, pension funds, trusts and companies.
- PIMFA represents both full and associate member firms. Full members provide a range of financial solutions including financial advice, portfolio management, as well as investment and execution services. They assist everyone from individuals and families, to charities and pension funds, all the way to trusts and companies. Associate members provide professional services to the PIMFA community.
- PIMFA leads the debate on policy and regulatory recommendations to ensure that the UK remains a global centre of excellence in the wealth management, investment advice and financial planning arena. Our mission is to create an optimal operating environment so that its member firms can focus on delivering the best service to clients, providing responsible stewardship for their long-term savings and investments.
- PIMFA was created in 2017 as the outcome of a merger between the Association of Professional Financial Advisers (APFA) and the Wealth Management Association (WMA) with a history as a trade association going back for 27 years – read more.
For further information on this release or other press matters please contact:
- Sheena Gillett – PIMFA Head of PR & Communications, firstname.lastname@example.org
+44 (0)20 7011 9869
- Nigel Ross-Scott – PIMFA Content Manager, email@example.com
+44 (0)20 7382 0371