Just before the Festive Break, the British and Swiss governments signed a reciprocal financial services agreement called the Berne Financial Services Agreement (BFSA).
This is the first agreement of it’s kind since the UK Brexit from the EU where previously UK financial services and wealth firms were allowed to ‘passport’ financial services into Europe and vice versa.
The agreement means that UK financial advisers will be allowed to advise their clients resident in Switzerland across all sectors of wealth rather than just be able to advice on the UK interests of Switzerland residents (with permission from the Swiss regulator).
This is fantastic news given we do have a number of clients already in Switzerland and it ‘jumps the gun’ on the EU. Switzerland is not a member state of the European Union (EU) or an European Economic Area (EEA) member but it has adopted various provisions of European Union law in order to participate in the EU’s single market, without joining as a member state. This means it’s citizens can freely move and work in the EEA as well as trade in permitted activities.
As for the EU, the Brexit Trade Agreement did not include financial services passporting although it was supposed to. Negotiations are still ongoing with regard to ‘Equivalency’ on financial services with 5 X Memorandums of Understanding (MOUs) agreed in January 2021. MOUs are essentially ‘agreements to reach an agreement’ only. One of the MOU’s between UK and EU regulators confirms that they are working towards ‘delegated authority’ where if an EU resident has a UK pension/investment, then respective EU advisers are not authorised to advice on unless they have set up a UK branch with FCA authorisation in UK and therefore advice will need to be delivered by a UK authorised IFA. This is where EU regulators delegate their authority to the UK FCA to oversee and regulate the advice on a UK pension/investment.
Fish, wine, cheese and cars are no problem, but finance is a ‘no’ at present. We do not ‘solicit’ or promote services to EU residents, but we will accept ‘Reverse Solicitation’ i.e. you approach us to help you with existing UK taxes, investments or pensions only. We will not advise on or arrange 'new money' investments for EU residents, but we will advise on existing UK arrangements that are then actioned/transferred/amended within the UK.
Financial Services Agreement With EU Getting Closer – The Windsor Framework
Signed on 27th February 2023, the Windsor Framework set our new Protocol to ease custom checks on goods arriving from Great Britain in particular for goods and services moving between the UK mainland and Northern Ireland as well as making things much easier for cross border trade on the island of Ireland as well as the rest of the UK with the whole of the EEA. This easement of the Protocol was noticeable warming of relations between the UK and the EU with new hopes that it will smooth the path to passporting financial services into Europe again. Perhaps both the UK and the EU (in particular Germany) recognise the importance of trade between the two blocks given the economic turmoil we are all experiencing?