Haran said: "In some areas the UK government has committed to diverge from EU rules, such as retail investment disclosures, albeit typically in a way that targets specific rules rather than via a broad-stroke deregulation.
"The government wants to create a more dynamic and competitive financial services sector by permitting more risk in the system and by adopting a regulatory regime that is better tailored to the UK’s interests.
"The MoU doesn’t undermine the UK’s flexibility to do this, or indeed to make financial services-related agreements with other jurisdictions such as Singapore."
The first big test of this new relationship will be the UK’s Overseas Funds Regime, which is likely to go live later this year, he said.
The OFR will create a new streamlined regime by which some EU Ucits will be given permission to market to UK retail investors.
"The first step is for HM Treasury to determine whether the EU’s Ucits regime is equivalent to the UK’s regime for marketing funds to retail investors.
"We are already seeing the UK regulator impose additional requirements on EU managers that wish to market their funds in the UK, such as in relation to fund value assessments and the upcoming consumer duty.
"Whether the UK grants EU funds easy access or whether it seeks to impose additional, UK-specific conditions on EU managers will be a stress test for the new relationship."
Simon Harrington, head of public affairs at adviser trade body Pimfa, welcomed the agreement.
"This will undoubtedly be of mutual benefit to both sides and support the UK’s role as a global financial services hub," he said.
"While we are certain that the scope of the agreement will be wide ranging, were [we] to ask for a single part of this to come to fruition in our sector, it would be the emergence of a regulatory approach to environmental, social & governance in the retail financial services sector, which is aligned with international standards.
"Ensuring an element of alignment – especially with respect to taxonomy and data standards – will ensure that firms that do operate cross border in this sector will not be required to effectively comply with highly divergent regulatory regimes."
carmen.reichman@ft.com
