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Tisa calls for 'third country equivalence' amid hard Brexit fears

Tisa calls for 'third country equivalence' amid hard Brexit fears

The Tax Incentivised Savings Association (Tisa) has called on government to focus on delivering EU "third country equivalence" for the UK's investment industry over single market membership amid signs the country is heading for a "hard" Brexit.

With discussions still rife over what form a UK departure from the EU could take, prime minister Theresa May hinted at the weekend  a "hard" Brexit was the preferred route, with no deal on immigration to keep the UK in the single market.

While such a suggestion has caused alarm in some quarters, Tisa has backed the idea and urged the government to now focus on achieving "regulatory equivalence".

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However, as part of the trade body's proposals submitted to HM Treasury, it also called on the government to ensure the industry attracted and retained the best talent.

Tisa Director General David Dalton-Brown said: "[The] government should task the FCA to commence work immediately on a domestic only version of the regulatory rulebook.

"Our aim should be full recognition that the UK has third country equivalent status for its regulatory framework with the EU. This is a win-win opportunity. Many of the EU Directives, like AIFMD and Mifid II, already embody the concept and through enabling legislation it can be added to others, such as Ucits. This would facilitate the continuation of existing business."

The trade body made a total of five recommendation which it said would allow the industry to "thrive outside the EU"  and did not require 'passporting rights' or the free movement of people.

In a note, Tisa said not being part of the EU's single market would not be an "insurmountable problem", however, this was "provided the government targets what the EU calls 'third country equivalence' in its negotiations".

"This would enable a reciprocal arrangement to be enacted for the 8,000 EU firms that are doing business within the UK today," Tisa added.

The proposals also highlighted the possible benefits of a new deal, arguing that an opportunity had arisen to "create a more streamlined regulatory framework".

"Tisa suggests an 'EU equivalent' rulebook for those firms that want access to trade financial services within the UK," the group added. "Then a simpler tier of rules for everyone else, cutting away red tape from those firms that only want to service UK consumers," the body said.

Maintaining access to skills was essential to protecting the industry from a hard Brexit, according to the body.

"UK firms need to feel confident that they have ongoing access to the pool of EU and non-EU talent. Professional people already working in UK financial services need to be reassured that we want them to stay," Tisa said.

It stressed the urgency of the current situation, warning that financial services businesses needed to know the government's "proposed direction of travel" in order to prepare for a new relationship with the EU and "secure free market opportunities with the rest of the world".