Relations between Switzerland and the UK
Switzerland and the United Kingdom (UK) have enjoyed intensive and multifaceted bilateral relations for many years. Both countries also have leading global financial centres. Because the UK is one of the key export markets for Swiss banks, it was important to ensure that relations with the UK could not only remain as undisrupted as possible after Brexit, but also be improved in a targeted manner.
However, Swiss banks engaging in cross-border business with private clients in the UK faced complex and in some cases unclear UK rules and concomitant risks, especially with regard to private clients domiciled in the UK. Swiss banks therefore lobbied for an ambitious expansion of reciprocal market access for banking and securities services.
Following intensive negotiations, the UK and Switzerland signed a comprehensive agreement on financial services (“Agreement between the Swiss Confederation and the United Kingdom of Great Britain and Northern Ireland on Mutual Recognition in Financial Services”) on 21 December 2023. The Agreement is unique in financial services, featuring a novel approach to market access. It is based largely on mutual, outcome-based recognition of the equivalence of regulatory and supervisory frameworks. The UK and Switzerland are pursuing bilateral cooperation with the aim of not only agreeing on this mutual equivalence, but also preserving it over the long term.
The Agreement lays the foundation for opening up markets in the areas of banking, securities services, asset management, insurance and stock exchanges as well as closer cooperation on a number of key financial services sector issues, including sustainable finance and collaboration within multilateral international forums.
Above all, the Agreement will significantly improve Swiss banks’ scope to offer cross-border wealth management that meets the needs of a receptive customer segment in the UK. First and foremost, they will see improvements and simplifications with regard to the high-net-worth individuals segment (private clients with assets over CHF 2 million), which accounts for a large proportion of cross-border banking business.
Over and above Swiss-UK relations, the Agreement’s innovative, carefully thought-out and highly promising approach also sends a strong signal that it is possible to create robust and practicable market access solutions that go beyond conventional approaches, which have reached an impasse in some cases.
The SBA welcomes the outcome of the negotiations wholeheartedly and will work towards a practicable implementation of the Agreement.