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. The UK left the EU on 31 January 2020. At the end of the transition period, the bilateral agreements between Switzerland and the EU ceased to apply to the UK. From 1 January 2021, a series of follow-up agreements came into force instead, which were reached with the UK as part of the Federal Council’s “Mind the Gap” strategy. The bulk of the applicable rights and obligations between the two states thus remained in place.
Because the UK is one of the key markets for Swiss banks’ export business, it was very important at the time that, post-Brexit and after the end of the transition period, relations with the UK could not only remain as undisrupted as possible, 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 individual clients domiciled in the UK, and these problems still persist. For this reason, Swiss banks have been calling for an ambitious expansion of reciprocal market access for banking and securities services.
A joint sector position paper published by economiesuisse and TheCityUK on 28 April 2020, to which the SBA also actively contributed, outlined a number of issues to be addressed. These were largely taken up in the Joint Statement signed by the then UK Chancellor of the Exchequer Rishi Sunak and former Federal Councillor Ueli Maurer on 30 June 2020.
On 21 December 2023, following intensive negotiations, the UK and Switzerland signed a comprehensive agreement on financial services that is based largely on mutual recognition of regulations ("Agreement between the Swiss Confederation and the United Kingdom of Great Britain and Northern Ireland on Mutual Recognition in Financial Services"). This represents an important step towards a formal agreement. It must now be approved by both countries’ parliaments.
The agreement represents a commitment to open markets by Europe’s two leading financial centres and underscores the two countries’ shared goals, namely to (re)open trading venues, ensure free capital flows and cross-border use of skills, avoid fragmentation and create healthy competition. The project has been supported by both countries’ financial services sectors from the outset.
The Financial Services Agreement provides a basis for measures to open up markets in the areas of banking, securities services, asset management, insurance and stock exchanges. It also lays the foundation for 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, which accounts for a large proportion of cross-border banking business.
The signed agreement is unique in the financial services sector and features a novel approach to market access. It has come from a conviction that mutual, outcome-based recognition of the equivalence of regulatory and supervisory frameworks across a broad front is the best way to protect key material interests, including in particular customer protection, the integrity and stability of the respective financial centres, and a level playing field. 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.
Outside the scope of 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 hopes that the agreement will be approved and put into force quickly.