EU Lawmakers Claim a Say on Access for U.K. Banks Post-Brexit

(Bloomberg) -- The system under which U.K. banks access the European Union after Brexit could soon become more complicated.

Lawmakers in the European Parliament are demanding a right to object to any executive decision granting regulatory “equivalence,” and to have the power over such decisions spread more evenly between different institutions in Brussels. If adopted, the measure could inject further uncertainty into a system of EU market access that the U.K. already regards as inadequate for the time after Brexit.

Equivalence decisions are “technical in nature,” but they also have “a clear political dimension, possibly balancing different policy objectives,” the parliament said in a non-binding report adopted on Wednesday. The process “should be subject to appropriate scrutiny” by the parliament and national governments.

While the opinion doesn’t have any immediate consequences, it offers a glimpse into the parliament’s thinking on other files that are currently under review and where the system of market access for third-country firms is being amended.

Under the “equivalence” system, foreign firms get access to the EU if their home country’s rules are deemed as tough as the ones in the bloc. It’s become a talking point in the Brexit negotiations, as the EU is offering what it calls an “improved equivalence” system to the U.K. This could entail a more intrusive degree of scrutiny by EU authorities because the size of the U.K.’s financial market makes the EU more susceptible to instability originating there.

The political nature of the process was also highlighted when the EU tied recognition of Swiss rules to progress on an unrelated political issue.

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