The European Commission is making progress in its process of determining possible equivalences between UK and EU financial services rules after Brexit, but is still awaiting clarification from London, said John Berrigan, Deputy Director-General of the European Commission's DG FISMA, in an exchange of views with members of the European Parliament's Economic and Monetary Affairs Committee (ECON) on Tuesday 27 October.
The Commission has sent questionnaires covering 28 areas to the UK and is currently studying the UK replies, he said. “We are almost ready”, Berrigan said, pointing to questions that remain to be asked in some areas.
In addition, the Commission needs clarification on how UK supervisors will use the discretionary power they have enjoyed under the temporary regimes for European companies, he said. It also wants to better understand how the UK plans to move away from European rules in each area (see EUROPE 12423/5).
Asked by MEP Ondřej Kovařík (RE, Czech Republic) about the degree of divergence that would be acceptable to the EU, Mr Berrigan replied that it was difficult to answer without further clarification from London.
“One cannot grant equivalence on the assumption that the current alignment will always be there when we know that the UK is going to diverge and set its own rules”, he said, stressing that “some level of reassurance would be needed that the divergence would not be too great”.
For Mr Berrigan, the impact on financial stability or insufficient protection for investors by the new UK rules could, for example, be assessment criteria.
The best way to overcome differences is in any case to have a forum for regular regulatory dialogue, he said.
MEPs also asked him about the risks to financial stability after Brexit. “Our monitoring of the markets showed that most firms are prepared”, he said. Nevertheless, certain risks of market volatility and limited disruptions cannot be totally excluded. “Brexit is, inevitably, a fragmenting event”, he concluded. (Original version in French by Marion Fontana)