UK and Switzerland sign Berne pact for open access to financial services
The Berne Financial Services Agreement legally binds open access to financial services between the two countries, maintaining high regulatory standards, market fairness, and investor protection.
In a historic development for global financial services, UK Chancellor Jeremy Hunt has signed the Berne Financial Services Agreement with Switzerland, marking a new era of financial cooperation.
This pioneering agreement, signed with Swiss counterpart Karin Keller-Sutter, is set to significantly ease the provision of financial services between the two nations.
Berne pact simplifies processes in asset management, banking, and investment services for UK and Swiss clients
The Berne Financial Services Agreement is a unique pact, focusing on mutual recognition of each other’s domestic laws and regulations concerning financial services. This move simplifies the business process for corporate and high-net-worth clients in both the UK and Switzerland. Under this agreement, firms in the UK can serve Swiss clients while primarily adhering to UK rules, and vice versa, across key areas like asset management, banking, and investment services.
A remarkable aspect of this agreement is the special provision for British insurance brokers, who, starting from 2024, will uniquely not require a Swiss base to serve Swiss clients. This exemption places British brokers at a considerable advantage compared to their international counterparts and marks a significant divergence from Switzerland’s forthcoming regulations for non-Swiss firms.
Both nations retain autonomy to revise or introduce new domestic regulations as necessary
The Berne Financial Services Agreement legally binds open access to financial services between the two countries, maintaining high regulatory standards, market fairness, and investor protection. Additionally, it allows both nations the autonomy to revise or introduce new domestic regulations as necessary.
This agreement not only strengthens international financial standards but also levels the playing field for smaller firms. It simplifies the regulatory landscape, especially for British financial advisers, who will no longer need Swiss registration to serve Swiss clients.
A closer relationship since the Brexit referendum
The significance of this agreement is further underlined by the thriving trade relationship between the UK and Switzerland, with a 53% growth in financial and insurance services trade from 2016 to 2022, reaching £3.28 billion in 2022.
The UK’s financial services sector, valued at approximately £254 billion as of Q2 2023, is a crucial contributor to its economy. The Berne Financial Services Agreement promises widespread benefits across the UK, supporting jobs and economic growth beyond London and the South East.
Parallel to this agreement, the UK is negotiating an enhanced Free Trade Agreement with Switzerland, aiming to broaden the scope of UK-Swiss trade.
UK Business and Trade Secretary Kemi Badenoch said: “This is just the latest deal we have struck with Switzerland to help our world-leading UK financial services companies access this lucrative market and grow UK-Swiss trade in services. This deal complements the work we’re doing with Switzerland to agree a new, modernised free trade agreement and will help the UK reach our goal to export a trillion pounds of goods and services a year by 2030.”
Miles Celic, chief executive officer, TheCityUK, said: “The Berne Financial Services Agreement marks a significant milestone for two of the world’s leading international financial centres. This innovative framework not only simplifies engagement in financial services, reduces barriers, and enhances efficiency, but it also strengthens market confidence and fosters innovation. It establishes a new and ambitious benchmark for how major financial centres can collaborate to establish gold-standard agreements, contributing to a more resilient, competitive, and interconnected global financial landscape. We look forward to continued collaboration with businesses and governments in both countries to ensure this agreement is effectively implemented across our industry.”
Joe Cassidy, partner, financial services, KPMG; chair, TheCityUK Switzerland Market Advisory Group, said: “The Berne Financial Services Agreement is a historic deal shaped by collaboration between governments, regulators, and industry leaders in both countries. It also paves the way for enhanced cooperation between other major global markets. As an industry, our immediate focus is on its full and effective implementation, alongside negotiating an innovative and complementary UK-Swiss Free Trade Agreement. An FTA with provisions for mobility, mutual recognition of professional qualifications and digital services will significantly enhance the MRA and set the standard for the second-country model in financial services regulatory cooperation.”
David Postings, chief executive, UK Finance, said: “The UK-Switzerland Mutual Recognition Agreement is a landmark agreement. Given it’s been drafted specifically for the financial services sector, the market access provisions and measures aimed at removing regulatory barriers go much further than those normally included in trade deals. The innovative agreement sets an ambitious precedent and we hope it will serve as the new standard for future deals with other financial centres around the world.”
Denis Vangelatos, regulatory risk and international trade sanctions director – EMEA, Aon, said: “The Berne Financial Services Agreement represents a fantastic opportunity for the UK and Swiss insurance sectors to continue to cooperate and flourish using a dynamic and forward-looking outcomes based approach to regulation. This new approach not seen in other trade agreements will foster innovation, increase market access, reduce cross border friction and, through mutual recognition, create a deep and trusted partnership for two of the world’s leading financial centres.”
Policy chairman of the City of London Corporation, Chris Hayward, said: “This is a great day for the UK’s and Switzerland’s financial services sectors. The Mutual Recognition Agreement will deliver huge benefits for firms in terms of increased market access and stability enhancing commitments. This will help to boost cross-border investment, jobs, growth and competitiveness in both our countries. We hope the MRA sets a template for the UK’s future trading relationships, helping contribute to setting new rules and standards in the vital industries of the future including tech, creative industries and digital trade in the 21st century.”