13th June 2024

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Business Industry and Financial

UK, Switzerland Sign Financial Services Deal on Market Access

(Bloomberg) — The UK and Switzerland signed an agreement to recognize each other’s laws and regulations in financial services, easing post-Brexit market access for firms including banks, insurers and asset managers. 

Chancellor of the Exchequer Jeremy Hunt and his Swiss counterpart Karin Keller-Sutter signed the treaty to seal mutual recognition in Switzerland’s capital Bern on Thursday. Both governments have been working on the accord for more than three years.

Read More: UK to Sign Deal Boosting City of London’s Swiss Ties Post-Brexit

It’s the first significant post-Brexit deal bringing Western Europe’s two major non-EU economies closer together, while a free trade agreement between them is still being negotiated. The UK government has said signing new trade deals is one of the benefits of splitting from the European Union. Hunt told a press conference in Bern that the UK can use the Swiss deal as a model for cooperation with other countries too.

“It is an agreement based on deference: Swiss firms can operate inside the UK under Swiss rules and UK firms can operate inside Switzerland under UK rules,” Hunt said. “This is a light-touch, progressive, future-leaning way of opening access.”

Switzerland, meanwhile, is seeking new terms for its relationship with the EU. Keller-Sutter said Switzerland doesn’t intend to send any signal to the EU with the new UK agreement.

“I don’t see a connection between this agreement and the new negotiations with the EU,” she said. “We want to improve our relationship with the UK and have a good relationship with the EU as well.”

The UK-Swiss agreement covers industries including asset management, banking, investment services and insurance for corporate clients — the mainstays of the City of London, which has lost some business since Brexit. Both governments said in separate statements that the treaty is a first of its kind. The deal gives UK companies “access to the Swiss market that no other country will have,” according to the Treasury.

Changes include:

  • Swiss asset managers can serve British clients with assets of more than £2 million directly from Switzerland and can apply Swiss law while doing this.
  • Financial advisers from the UK will no longer need to be registered with Swiss bodies to serve clients from the country, and will therefore no longer need to take Swiss examinations.
  • British insurance brokers can continue to serve Swiss clients without having to establish a local base, which will be required of other foreign brokers from next year.
  • British insurers can now serve Swiss corporate clients directly, however life, accident, health and car liability insurances are excluded from this. Also, retail insurers serving individual clients are excluded.

Hunt said it was impossible to overestimate the potential impact of the new approach, which could see firms from other countries operating in the UK under their national rules.

It contrasts with the approach of the EU, where members have to follow the principle of “dynamic alignment to each other’s rules and regulations,” Hunt said.

Both countries hope to boost their financial sectors with the deal. Switzerland is the UK’s third largest trading partner for financial services. Bilateral trade grew to £3.3 billion ($4.2 billion) last year, according to the Treasury.

Negotiations on the treaty, which started in June 2020 with a joint statement of then-Chancellor Rishi Sunak and Swiss finance minister Ueli Maurer, took some six months longer than the Swiss Bankers Association had last estimated.

–With assistance from Katherine Griffiths and Alex Morales.

(Updates with comment from Hunt, Keller-Sutter starting in third paragraph.)

©2023 Bloomberg L.P.