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Mairead McGuiness, candidate to become the EU’s next financial services boss, said the UK should expect “consequences” after Brexit if the Government decides to diverge from the bloc’s methods in industry. Ireland’s commissioner-designate told members of the European Parliament there will be “significant changes” for financial services firms after Britain’s post-Brexit transition from EU rules at the end of the year. She added the EU is preparing for the fallout if it decides to limit cross-border access to London-based banks and trading platforms.
In a letter to MEPs, Ms McGuinness said: “There will be a very different relationship compares to the current situation in terms of market access, the regulatory framework and supervisory oversight.”
The Irish politician was selected to be Dublin’s next top eurocrat in Brussels after Phil Hogan resigned after becoming embroiled in controversy for breaking coronavirus rules.
Before being allowed to formally start her new job, Ms McGuinness must secure the backing of MEPs.
In a written response to questions from the EU Parliament, she insisted Britain would have to suffer the “consequences” of diverging from EU rules.
The EU is currently planning to grant British-based firms access to its financial services market using the so-called equivalence system.
Under the process, the European Commission unilaterally decides whether rules are tough enough to allow a jurisdiction’s companies to do business with customers in the EU.
Eurocrats are currently assessing the UK’s regulatory framework to judge whether it is robust enough to grant access after the end of the year.
Ms McGuinness said: “The UK begins from a position of close convergence, but has clearly stated its general intention to diverge from EU rules.
“While the UK is of course entitled to diverge after transition, this increased uncertainty will naturally have consequences for the EU’s equivalence assessments.”
She insisted any equivalence decisions would come with strict conditions.
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Ms McGuinness said: “Should equivalence be granted in a particular area, it will need to be accompanied by commitments not to deviate from the EU framework for the period covered by the equivalence decision.”
She also called on European banks to end their reliance on the City of London as the Continent’s top finance hub.
But they were also warned to prepare for an acrimonious split between the EU and UK.
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Ms McGuinness said: “As tensions in the overall EU-UK negotiations have increased, we continue to prepare for all possible scenarios, including a no further equivalences scenario.
“Market participants are urged to take all necessary steps by the end of 2020 to prepare for all possible outcomes.
“It will not be business as usual as, in any case, UK financial services firms will lose the benefit of the financial services passport.”
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