The European Commission’s top financial services officials today shrugged off U.K. fears that Brexit could disrupt the continuity of cross-border insurance and derivative contracts and that the bloc’s evolving stance on granting regulatory equivalence decisions is taking a protectionist slant.
Speaking at a POLITICO event Thursday in London — U.K. Financial Services industry: shaping the new trajectory — the director-general of the Commission’s financial services directorate, Olivier Guersent, said there will be no “cliff” on Brexit day for cross-border contracts.
On March 30 next year, contracts “will be continuous,” he said. Where companies could have problems after Brexit is if they want to “modify” those contracts, he added. Then, you “have to go to the … regulator and request authorization to do this. If you’re smart, you would have gone beforehand.”
Without a divorce deal between the U.K. and EU before March 29, firms fear that cross-border financial contracts will become legally uncertain without a backup plan in place, and have repeatedly called on the Commission to clarify how it intends to deal with the situation. But so far, it has refused to do so, saying it is a matter for the private sector to sort out.
Guersent’s latest comments frustrated U.K. Conservative MEP Kay Swinburne. She challenged him by stressing that “the world’s economists and central bankers tell us this is a problem.”
Swinburne also decried what she called Brussels’ “more protectionist, defensive” attitude toward its approach to equivalence rulings, which allow firms from outside the bloc to access the single market on the basis that their home regulations are compatible with the EU’s.
Mark Hoban, a former HM Treasury minister, said the U.K. and EU both should let the regulators sort out such outstanding issues as quickly as possible and leave the politics aside.
But Guersent maintained that “these things are technical but also political … that’s the way politics work all the time.”
Still, his boss, Commission Vice President Valdis Dombrovskis, told the audience that he was committed to reaching an agreement with the U.K. and a technical working group will soon finalize a report detailing the EU’s ideas for a way forward on these issues.
