Chancellor Jeremy Hunt has (21 December) signed the Berne Financial Services Agreement, a pact on financial services cooperation, with his Swiss counterpart Karin Keller-Sutter.
The agreement sets sectors where the UK and Switzerland will “mutually recognize 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 reportedly 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 centers. 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.”