PRESS RELEASE : UK signs first of its kind financial services agreement with Switzerland [December 2023]

The press release issued by HM Treasury on 21 December 2023.

• Chancellor Jeremy Hunt signs the Berne Financial Services Agreement – a ground-breaking pact on financial services cooperation

• UK businesses to provide financial services to the Swiss domestic market, and vice versa, more easily

• Berne Financial Services Agreement provides access to the Swiss market that no other country will have, while also providing certainty for businesses and upholding high standards of regulation

Chancellor Jeremy Hunt has today (21 December) signed the Berne Financial Services Agreement, a first of its kind pact on financial services cooperation, with his Swiss counterpart Karin Keller-Sutter.

The agreement sets sectors where the UK and Switzerland will mutually recognise each other’s domestic laws and regulations on financial services, making it easier for corporate and high net worth clients in the two markets to do business with each other.

The Berne Financial Services Agreement enables the frictionless, cross-border provision of financial services between the UK and Switzerland across areas such as asset management, banking, and investment services. For certain sectors it means that a firm based in the UK will be able to serve clients in Switzerland while largely following UK rules, and vice versa.

The agreement also secures unique access for British insurance brokers to the Swiss market. From the start of 2024, Switzerland will require any non-Swiss firms to establish a base in the country before serving Swiss clients. The UK will be the only country in the world not required to do this, putting British brokerage firms at a significant advantage to international competitors as they can continue to do business as they always have done.

Jeremy Hunt, Chancellor of the Exchequer, said:

“The Berne Financial Services Agreement is a global first and builds on the UK and Switzerland’s strengths as two of the world’s largest financial centres.

“It cements open access for financial services between our two nations for decades to come, helping us grow the economy and serving as a blueprint for future agreements with other key trading partners.”

The Berne Financial Services Agreement will make open access in financial services legally binding between the UK and Switzerland for decades to come, all while maintaining high standards of regulation, market fairness and investor protection. Both countries will also have the freedom to revise or introduce new domestic regulation as they see fit.

The agreement provides an opportunity for the UK and Switzerland to work together to strengthen international financial standards. It will also help level the playing field for some smaller firms, who will no longer have to invest time and money in navigating unfamiliar Swiss rules.

Financial advisors will also benefit. British financial advisers to high-net-worth individuals will no longer need to be registered by Swiss registration bodies to serve Swiss clients. This will remove requirements to sit Swiss examinations or provide documentation evidencing suitability, cutting red tape for the UK’s financial advisory industry.

The Berne Financial Services Agreement is only possible due to new freedoms granted to the UK following its exit from the European Union. The agreement will enhance the UK and Switzerland’s already thriving financial services relationship. Between 2016 and 2022, UK trade in financial and insurance services with Switzerland grew by 53% – reaching £3.28 billion in 2022.

The UK financial services sector is a significant contributor to the domestic economy and was valued at approximately £254 billion in the four quarters to Q2 2023. In 2020, around 40% of financial services to Switzerland were exported from UK regions outside of London and the South East, and two out of three jobs in financial services are based outside of London. This means that the benefits of the Berne Financial Services Agreement will be felt across the UK, bolstering jobs and growing the UK economy.

Separate to the Berne Financial Services Agreement, the UK is also currently negotiating an enhanced Free Trade Agreement with Switzerland that will boost ties and cover the full range of trade between the two countries.

Business and Trade Secretary Kemi Badenoch said:

“This is just the latest deal we have struck with Switzerland to help our world-leading UK financial services companies access this lucrative market and grow UK-Swiss trade in services.

“This deal complements the work we’re doing with Switzerland to agree a new, modernised free trade agreement and will help the UK reach our goal to export a trillion pounds of goods and services a year by 2030.”

Miles Celic, chief executive officer, TheCityUK, said:

“The Berne Financial Services Agreement marks a significant milestone for two of the world’s leading international financial centres. This innovative framework not only simplifies engagement in financial services, reduces barriers, and enhances efficiency, but it also strengthens market confidence and fosters innovation.

“It establishes a new and ambitious benchmark for how major financial centres can collaborate to establish gold-standard agreements, contributing to a more resilient, competitive, and interconnected global financial landscape.

“We look forward to continued collaboration with businesses and governments in both countries to ensure this agreement is effectively implemented across our industry.”

Joe Cassidy, partner, financial services, KPMG; chair, TheCityUK Switzerland Market Advisory Group, said:

“The Berne Financial Services Agreement is a historic deal shaped by collaboration between governments, regulators, and industry leaders in both countries. It also paves the way for enhanced cooperation between other major global markets.

“As an industry, our immediate focus is on its full and effective implementation, alongside negotiating an innovative and complementary UK-Swiss Free Trade Agreement. An FTA with provisions for mobility, mutual recognition of professional qualifications and digital services will significantly enhance the MRA and set the standard for the second-country model in financial services regulatory cooperation.”

David Postings, chief executive, UK Finance, said:

“The UK-Switzerland Mutual Recognition Agreement is a landmark agreement. Given it’s been drafted specifically for the financial services sector, the market access provisions and measures aimed at removing regulatory barriers go much further than those normally included in trade deals. The innovative agreement sets an ambitious precedent and we hope it will serve as the new standard for future deals with other financial centres around the world.”

Denis Vangelatos, regulatory risk and international trade sanctions director – EMEA, Aon, said:

“The Berne Financial Services Agreement represents a fantastic opportunity for the UK and Swiss insurance sectors to continue to cooperate and flourish using a dynamic and forward-looking outcomes based approach to regulation.

“This new approach not seen in other trade agreements will foster innovation, increase market access, reduce cross border friction and, through mutual recognition, create a deep and trusted partnership for two of the world’s leading financial centres.”

Chris Hayward, policy chairman of the City of London Corporation, said:

“This is a great day for the UK’s and Switzerland’s financial services sectors. The Mutual Recognition Agreement will deliver huge benefits for firms in terms of increased market access and stability enhancing commitments. This will help to boost cross-border investment, jobs, growth and competitiveness in both our countries.

“We hope the MRA sets a template for the UK’s future trading relationships, helping contribute to setting new rules and standards in the vital industries of the future including tech, creative industries and digital trade in the 21st century.”

For more information, read the full text of the agreement and explanatory material.