Britain Must Comply With EU Regulations To Access Consumer Finance Markets: EU
13 Feb 2020
Approx Reading time: 2 minutes
- Valdis Dombrovskis, who is the financial services chief of the EU, has said Britain would need to comply with EU regulations if its financial service providers wish to keep accessing EU-based consumer markets.
- Financial service providers risk losing access to EU-based markets following the expiration of the post-Brexit transition period in December 2020.
The Brexit transitionary period would end in December of this year, however, the British government has now demanded that London, which is the financial capital of the country, be provided permanent access to markets in Europe even after the country fully leaves the EU.
UK’s full membership status of the European Union expired in January 2020, however, now the country has a transitionary period until 31st December to enter trade agreements with 27 other countries that form the EU.
Now, according to reports, the British government is seeking permanent equivalence decisions as far as its financial sector is concerned. Essentially, this is a request that Britain has access to markets in the EU for specific activities, as long as it complies with the same rules of regulation that apply to Brussels.
In 2018, according to figures
reported by the UK Parliament, financial services contributed around 7% of the total output of the UK, making it an important sector for the country’s economy. Financial service providers in the UK, including those that are originally based in the US, currently enjoy free access to consumer markets in the EU. These service providers might have their access to EU markets revoked post-Brexit, which is a valid cause of concern for the UK government considering its impact on the sector and, hence, on the economy.
However, if the UK can make adjustments to comply with the established standards of the European, UK-based financial service providers might continue to have access to EU-based consumer markets. Otherwise, at least according to Valdis Dombrovskis, who is the financial services chief of the EU, financial service providers in the UK may have their access cut to EU-based consumer markets after the Brexit transition period is over.
But Boris Johnson, the British Prime Minister, has made known his desire to shift away from some core EU regulations, which could have a drastic impact on the consumer finance service providers in the country in 2021.