Switzer­land-UK: New rules for cross-bor­der fi­nan­cial ser­vices

After sev­eral years of ne­go­ti­a­tions, the fi­nance min­is­ters of both coun­tries today signed the bi­lat­eral agree­ment in the area of fi­nan­cial and re­lated pro­fes­sional ser­vices. This marks the be­gin­ning of a new type of co­op­er­a­tion be­tween two of Eu­rope's most im­por­tant fi­nan­cial mar­kets.

Pi­o­neer­ing na­ture of the fi­nan­cial ser­vices agree­ment

The agree­ment in­cludes reg­u­la­tory sim­pli­fi­ca­tions and sec­toral mar­ket ac­cess for cross-bor­der ser­vices in the areas of bank­ing and in­vest­ment, asset man­age­ment, in­sur­ance and fi­nan­cial mar­ket in­fra­struc­ture. The basic idea is the mu­tual recog­ni­tion of the rel­e­vant na­tional reg­u­la­tory re­quire­ments. In­stead of har­mon­is­ing na­tional reg­u­la­tions, the re­sults-ori­ented ap­proach fo­cuses on com­pa­ra­ble reg­u­la­tory out­comes. The UK-Swiss model thus dif­fers fun­da­men­tally from the pre­vi­ous prin­ci­ple of uni­lat­eral recog­ni­tion of equiv­a­lence as ap­plied by other coun­tries.

economiesu­isse and TheCityUK have laid the foun­da­tions for this new ap­proach with sig­nif­i­cant sup­port from var­i­ous sec­tor as­so­ci­a­tions of both coun­tries. Both um­brella or­gan­i­sa­tions there­fore wel­come the con­clu­sion of ne­go­ti­a­tions marked by today's sign­ing. This will pro­vide pos­i­tive im­pe­tus for cross-bor­der trade in ser­vices. How­ever, the true test for the new trade model is still to come with its entry into force.

Com­pet­i­tive ad­van­tage for the econ­omy as a whole

From a macro­eco­nomic per­spec­tive, the agree­ment clearly has a pos­i­tive ben­e­fit and strength­ens the local fi­nan­cial cen­tre in eco­nom­i­cally un­cer­tain times. How­ever, the ac­tual ex­pected im­pact on the in­di­vid­ual sec­tors is likely to vary. A bi­lat­eral agree­ment al­ready ex­ists in the in­sur­ance sec­tor and re­duces the need for fur­ther steps. The ben­e­fits of the fi­nan­cial ser­vices agree­ment for this sec­tor are there­fore sig­nif­i­cantly less than for oth­ers. For the bank­ing sec­tor, the new agree­ment re­duces the cur­rent com­plex­i­ties and un­cer­tain­ties in cross-bor­der busi­ness.

Frame­work con­di­tions for deep­en­ing bi­lat­eral trade

Switzer­land and the UK are not only im­por­tant trad­ing part­ners, but are also among the strongest fi­nan­cial cen­tres and largest ex­porters of fi­nan­cial ser­vices in the world. The sign­ing of the fi­nan­cial ser­vices agree­ment marks an im­por­tant first step. Other mea­sures are also re­quired, such as the mod­erni­sa­tion of the bi­lat­eral free trade agree­ment.