In December 2018, the U.K.’s Better Regulation Executive invited the Organisation for Economic Cooperation and Development (“OECD”) to conduct a review into the U.K.’s international regulatory cooperation practices. The OECD published a report in May 2020 recommending that HM Government ensure more systematic consideration of international regulatory cooperation across government and regulatory bodies. In response, HM Government has published a planned programme of work as well as a Call for Evidence to help identify priorities for regulatory cooperation.
The FMLC has submitted a response drawing attention to its work on cross-border cooperation in relation to financial services regulation, especially in the aftermath of the Global Financial Crisis. Divergent national approaches and differences present a serious challenge to effective cross-border regulation. Additionally, in the context of the U.K.’s withdrawal from the E.U., the FMLC has drawn attention to the legal and operational complexities which may arise when authorities in the U.K. are no longer party to cooperation arrangements with European authorities. This is exemplified with regards to the international coordination necessary, for instance, in the context of bank recovery and resolution, in relation to which, after the Global Financial Crisis, the E.U. adopted an overarching piece of legislation.
The U.K. currently benefits from mutual obligations between E.U. Member States and, in particular, will withdraw from regional and international collaboration arrangements agreed in the aftermath of the financial crisis. The operational impact which is likely to result from the wholesale loss of the rules is likely to be significant. Given that the challenges facing the financial services—whether arising in the context of, for example, the Covid-19 pandemic or the advent of cryptocurrencies—are characterized by their cross-border nature and the requirement for multijurisdictional solutions, the FMLC would urge HM Government to prioritise coordination with authorities around the world.
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