Mutual recognition – a basis For market access after brexit

1 EXECUTIVE SUMMARY
The IRSG Report on Third Country Regimes and Alternatives to Passporting, published on
23 January 2017, concluded that the preferable model for a future relationship between
the UK and EU is to have a bespoke agreement under which mutual rights of access to
each other’s markets would be allowed.
The government’s White Paper of 2 February 2017 and the Article 50 letter served by
the UK on 29 March 2017 suggest that the UK’s intention is to have the freest possible
trade in financial services between the UK and EU member states (as similar in scope to
the passporting regime as is realistic and possible), and a bespoke mutual access model
(which would cover all aspects of financial services, including both retail and wholesale
business) is seen as the best model for achieving that objective.
The purpose of this IRSG Report on Mutual Recognition – A Basis for Market Access
After Brexit is to look in more detail at what mutual recognition would look like – i.e. to
consider some of the key issues that would need to feature in any bespoke arrangement
based on mutual recognition and which would form part of a wider free trade
agreement (“FTA”) between the EU and UK. The Report assumes that the UK would
be looking for the widest possible rights of access, potentially including all four of the
modes of supplying services that are typically covered by FTAs.1
As the UK and EU already have matching regulatory and supervisory frameworks and
standards, a broad agreement for mutual access can be based on mutual recognition
of each other’s regulatory frameworks and standards. This will require a mechanism for
regulatory alignment to be set down in the financial services chapter of a wider FTA.
This Report identifies the following issues as being key to agreeing a broad bespoke
arrangement for mutual access:

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