On December 21st, Switzerland and the United Kingdom entered into an agreement on the mutual recognition of financial services (the Berne Financial Services Agreement). This Agreement is largely based on mutual recognition of the equivalence of national legislations and regulations. It aims at fostering competitiveness and cooperation between these two jurisdictions which, while being both outside of the European Union, constitute major European financial centers.
The negotiation process had been initiated more than two years ago with the signing, on June 30, 2020, of a Joint Statement between the Federal Department of Finance and Her Majesty’s Treasury on deepening cooperation in financial services.
Switzerland and the UK, both being outside of the European Union, are both confronted to challenges regarding market access at the European level and thus share a common interest for reciprocity. The announced objective was to conclude a legally binding agreement with common standards in order to improve the cross-border market for financial services between Switzerland and the UK. The agreement’s intended focus is the provision of services to wholesale and sophisticated clients in the fields of insurance, banking, asset management and capital markets (including market infrastructure). Thus, the Agreement aims at avoiding market fragmentation and thereby benefits consumers, the financial sector as well as the broader global economy.
While the Agreement is welcome, it does not remediate the absence of passporting at the European level.
