On 26 March 2021 the European Union ("EU") and the United Kingdom ("UK") confirmed that technical discussions on the text of the Memorandum of Understanding ("MoU") referred to in the December 2020, Joint Declaration on Financial Services Regulatory Cooperation, had concluded. Formal steps now need to be undertaken on both sides before the MoU can be signed. As at the time of writing, the MoU had not been signed.
Catherine MacFarlane, associate: "The MoU between the EU and the UK, once signed, will create the framework for voluntary regulatory cooperation in financial services between the UK and the EU. The MoU will establish a Joint UK-EU Financial Regulatory Forum, which will facilitate discussion between both parties on financial services issues such as protecting market integrity, investors and consumers along with securing financial stability.
It is important for firms to understand that the MoU is not legally binding but in effect, is an agreement to reach an agreement on financial services. While the MoU will not deal with equivalence assessments, it seems, from an EU perspective at least, until the MoU is signed, equivalence assessments will not progress. This was indicated by EU Commissioner for Financial Services, Mairead McGuinness on 11 May 2021, when she stated that "We will resume our equivalence assessments once the regulatory cooperation framework is in place and do so on a case-by-case basis, taking into account the UK's regulatory intention". So it would seem that equivalence determinations remain some way off."
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