Global menu

Our global pages


What happened to the UK-EU Joint Declaration on Financial Services Regulatory Cooperation?

  • United Kingdom
  • Financial services and markets regulation
  • Investment funds and asset management




Alongside the Trade and Co-operation Agreement (“TCA”), the UK and the EU entered into a series of joint declarations.  The first declaration committed the UK and the EU to “agree to establish structured regulatory cooperation on financial services”, to be known as the Joint Declaration on Financial Services Regulatory Cooperation or memorandum of understanding (“MoU”).

The joint declaration committed the UK and EU to agree the MoU by the end of March 2021.  At that time both the UK and EU confirmed that a text had been agreed in principle, but no MoU has as yet been formally agreed or published.  

While we are aware of purported leaked copies of the text of the MoU circulating, naturally we cannot comment on the basis of those copies.    

Prior to the publication of the joint declarations in December 2020 there was some hope that the scope of the MoU might include a framework for the granting and withdrawal of equivalence decisions, however the joint declaration made it clear that the future MoU was to be “without prejudice to the unilateral and autonomous decision-making process of each side”. 

Thus it is expected that the MoU will establish only a forum for discussion.  As limited as the expected scope of the MoU may be, the conclusion of a UK-EU MoU remains desirable.

Head of Financial Services, Michaela Walker comments:

“Memoranda of understanding are the frameworks by which the financial services regulatory authorities of countries discuss regulatory developments and co-operate with one another.  Once an MoU is in place, hopefully, negotiations between politicians will give way to discussions between regulators, and the UK and EU can establish a more constructive dialogue and relationship.”

Read our client briefings:

What is delaying the agreement of the MoU?

Despite the commitment in the joint declaration, the EU Commissioner for Financial Services, Mairead McGuinness, is on record saying that the EU does not feel any pressure to rush decisions about financial services, whether in respect of the MoU or decisions as to whether the UK financial services regulation will be found equivalent to EU financial services regulation. 

Subsequently, the MoU got caught up in the fishing permit dispute between the UK and the EU in relation to fishing in waters off the coast of Jersey, which is part of a long-running and intractable series of fishing disputes.  The French Minister for Europe, Clément Beaune, has said that he is prepared to veto the MoU until the dispute is resolved to his satisfaction. 

Accordingly, it is not at the moment possible to predict when or if the MoU will be forthcoming.

Expected content of the MoU 

Speaking to the FIA annual conference on 16 March, Mairead McGuinness, EU Commissioner for Financial Services, said:

“I envisage a flexible non-binding framework similar to what we have with the United States, which works very well: a voluntary structure for regulatory cooperation, to talk about international developments, and to discuss how to move forward with equivalence determinations, with full respect for the autonomy of both sides.

“The purpose will not be to restore market access rights that the United Kingdom has lost because of Brexit, nor will it constrain the European Union’s unilateral equivalence or regulatory process.”

The MoU is expected to create a talking shop where the UK and EU can share information and discuss:

  • regulatory developments and other issues of common interest
  • the adoption, suspension and withdrawal of equivalence decisions
  • market developments and financial stability issues
  • enhanced cooperation and coordination including at international bodies

We anticipate the MoU will repeat previous assertions that any such discussions will not restrict the ability of the UK or the EU to implement those regulatory, supervisory or other legal measures each considers appropriate. 

We do not expect the MoU to create rights or obligations under international or domestic law.

Financial Services partner Julian Brown comments:

“If and when agreed, an MoU in the terms expected will not change the basis on which financial services trade across the UK-EU border takes place, but by confirming that such trade will take place on the basis of the limited arrangements already in place, it would give financial services firms a measure of welcome certainty.”


Until the UK-EU MoU is agreed, the EU will not recommence considering whether to make findings of equivalence in respect of the UK.  The EU has long delayed making its assessments, originally promised for the end of July 2020.  The EU has warns that:

  • there cannot be equivalence if there is wide regulatory divergence
  • the EU will grant equivalence only when it is in the EU’s interest

Financial services partner Ronald Paterson comments:

“It is clear that the is EU prioritising the development of its financial services industry and may be reluctant to find the UK equivalent in respect of the limited aspects of financial services covered by the equivalence regimes.”

What is the implication of there being no MoU in place? 

As discussed, absent the conclusion of an MoU, the EU will not recommence considering whether to make findings of equivalence in respect of the UK.

However, while having a financial services MoU in place would be of benefit to the UK and the EU, it isn’t critical and doesn’t in itself change the basis upon which financial services are traded (or not) across the UK-EU border.  Most of the circumstances we can think of in which an MoU would be of real assistance, for instance during a cross-border financial crisis, are circumstances in which we would expect the UK and EU regulatory authorities to co-operate on an informal basis even if no MoU is in place.

For more information on how the MoU may affect your business, please get in touch