A milestone in international financial services cooperation: The Berne Financial Services Agreement

06 February 2024

The signing of the Berne Financial Services Agreement in December was a key milestone in the history of bilateral agreements. The agreement is a result of persistent efforts by both governments and industry and marks a significant step towards more interconnected, frictionless, and competitive international trade in financial services.

Our position papers published in 2018 and 2020 in collaboration with economiesuisse laid the foundation. These papers set out a vision of an ambitious UK-Swiss financial and related professional services relationship centred around the mutual recognition of regulatory and supervisory regimes and aimed at fostering improved and reciprocal market access. They emphasised the need for focus on comparable outcomes rather than rigid, line-by-line comparisons of supervisory regimes. This approach, now embodied in the agreement, is testament to forward-thinking and adaptability in international financial cooperation.

The signing of this agreement is not just a symbolic act, and it goes beyond mere trade facilitation. The commitment of both the UK and Switzerland, two of the world’s major financial centres, to pursue outcomes-based mutual recognition is a bold step towards deepening cooperation in financial services across insurance, banking, asset management, and capital markets. It also includes significant movement on market infrastructure.

The agreement sets a new benchmark in regulatory cooperation, with mutual recognition of standards and practices within financial services at its core. It is a practical move towards streamlining our financial services engagement, reducing trade barriers and promoting efficiency. The commitment and willingness of both the UK and Swiss governments to engage with the industry and consider its input has been instrumental in reaching this point.

In a world where economic landscapes are rapidly changing, the need for agile and responsive regulatory frameworks is more important than ever. This ‘next-generation’ agreement is one that can set a standard for future trade and investment. Such a framework addresses the latest policy issues and includes a dynamic review process to ensure its ongoing relevance. This approach will enable continuous recalibration of regulations and provide the flexibility necessary for further developing bilateral integration in the future.

The Berne Financial Services Agreement between the UK and Switzerland is poised to play a crucial role in bolstering confidence among market participants. It will spur innovation and economic growth in both countries. However, the true measure of its success will lie in its implementation and utilisation. The signing is just the beginning of its journey as a next-generation partnership.

The real challenge is ensuring that the opportunities it offers are fully understood and leveraged by business. Continued engagement of our respective industries, alongside the governments’ efforts, are crucial to move this in a positive direction.

Looking ahead, our priority now is to continue to collaborate with our governments on the ongoing negotiation of UK-Swiss Free Trade Agreement (FTA). Ensuring that the FTA complements the Berne Financial Services Agreement, especially in areas like mobility, mutual recognition of professional qualifications, and digital services and innovation, will maximise the benefits of this bilateral cooperation.

In a world where protectionism is on the rise, this agreement emerges as an important example of international cooperation, laying the groundwork for a more resilient, competitive and interconnected global financial ecosystem. It demonstrates how major financial centres can and should collaborate, sets the standard for future agreements between advanced economies, and helps counter the trend towards economic insularity.

We commend the HM Treasury’s inclusive approach to working alongside the industry and thank the Switzerland Market Advisory Group (MAG), particularly Joe Cassidy of KPMG in his capacity as Chair, whose insights and expertise have been pivotal in informing the mutual recognition agreement. This partnership highlights the effectiveness of cross-industry cooperation, bringing together diverse entities like the City of London Corporation, the Association of British Insurers (ABI), the Confederation of British Industry (CBI), and others.

Nicola Watkinson photo
Nicola Watkinson Managing Director, International

Nicola Watkinson leads TheCityUK’s International team, which provides unique insight and deep expertise into the markets and trade relationships underpinning the UK’s success as a leading global financial centre.

Prior to joining TheCityUK, Nicola was General Manager, The Americas, for the Australian Trade and Investment Commission and Deputy Consul General in New York, where she led a 90-strong team based across North and South America and managed five consulates.