UK financial sector warned EU equivalence decision will be 'political'
Financial heavyweights from the UK and Switzerland have dismissed equivalence as way for the City to retain EU market access after Brexit, warning it could impact on Britain's competitiveness and leave the Square Mile open to political machinations from Brussels.
Jorg Gasser, Switzerland's state secretary for international finance, said his country has found it increasingly difficult to clinch equivalence - which requires EU approval - since the Brexit vote.
"As you can well imagine, the European Union is not ready to find progressive or interesting solutions that might serve as a precedent for the negotiations between the European Union the United Kingdom," he said during a panel at the City Week conference in London.
He said Switzerland - deemed a "third country" in the eyes of EU authorities - has long since ironed out any technical issues that might impede it from having its regulatory system recognised as equivalent to the bloc's own.
"Technically we are equivalent - no one contests that," Mr Gasser said.
"All the technicalities have been solved for a very long time, but ... the equivalence (decisions) are never only technical they are most of all - or at least to the decision that we tackle now - they are political."
"That makes it difficult," he added.
Lloyds Banking Group chairman Lord Blackwell - who was also speaking at the conference - cautioned that an equivalency arrangement would put the UK at risk of losing its competitive edge.
"I think the UK will need to be wary of seeking equivalence under a regime that means the UK had to adopt all of the EU directives, as the EU without the UK may have a less friendly attitude towards market activities.
"And the UK's primary objective must be to preserve its global competitiveness.
"So mutual recognition... I think is the best way forward," he added.
Champions for Britain's wider financial sector have been calling for a comprehensive free trade agreement with the EU which would cover financial services through mutual recognition, meaning financial firms will not have to rely on equivalence - which could be revoked.
Mr Gasser said at least one equivalency arrangement between the EU and Switzerland is due to run out at the end of 2018, and that it has been difficult to provide assurance that equivalency will be renewed given that a decision is unlikely to come before October or November.
"It will be too late, and of course we are very pressed for time.
"We've tried to force that as much as we can with the European Union in order to get that equivalence as soon as possible.
"But it is time that is of the essence - and the strategic decisions will be taken as I said in the coming months, and so there is not much time left in order to infuse the security in the market."
The Swiss politician added that his country will miss having Britain at the EU negotiating table.
"We were always very happy to have had the United Kingdom in the European Union, because our approach toward international regulation was very similar.
"The expertise that the United Kingdom brought to the table in Brussels helped us along with policy shaping in the the European Union. This will not be the case in the near future."