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Post Brexit?
Just a week, but what a week
replace a requirement to comply with EU Directives with one to replicate UK legislation? If we wish to differentiate ourselves from the UK regulatory environment, will we have to go through a painstaking equivalence assessment each time?
It will also be necessary to ensure that the playing field is level and the process is not used for protectionist reasons, namely to keep Gibraltar firms from competing with their UK counterparts. For instance, Gibraltar has a highly competitive and successful motor insurance business. It would be against the interests of UK consumers if they were denied access to Gibraltar insurers due to bureaucratic delay or feet dragging.
Similarly, whilst I have no doubt that Gibraltar will be included in any bilateral agreement the UK reaches with other countries, will we be allowed to do so with different legislation and regulations from that of the UK?
Need this concern us? I do not believe so; however it does mean that our exit from the EU will not result in the legislative freedoms some believe we will get. The much bemoaned red tape will stay or its equivalent will replace it, perhaps we should call it blue tape.
96% of the people of Gibraltar, who voted in the referendum, did not want us to be in this position. However, we are where we are. I see this less as a damaging event for the finance sector here, more as a pointless one, leading to uncertainty, worry and cost simply to end up in the same place where we began. Cause to be irritated rather than fearful
The globalisation of financial services is an irreversible trend. With it come rules and regulations. These are rules we in Gibraltar do not set, but we must follow. It is a shame that the UK, who had the most influential role in the setting of these rules within the EU has simply walked away from the table. They have chosen “regulation without representation”. May be as a result they will soon understand what it is like to be us.
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By Marcus Killick, CEO, Isolas
Iwrite this on Brexit +7 (or Boris +1 or Jeremy -5, who
knows what history will call it). It is exactly one week since we woke to the news that the referendum had resulted
in a majority for those who wished to leave the EU. I say woke, for others it is a week since the day, and reality, dawned to bring closure to a restless night and its growing sense of inevitability.
The markets crashed then rose, the pound disappeared then resurfaced, British politicians proved that the USA were not the only ones with problems in that area.
Given that this article will be published some time hence, any form of speculation is more likely to prove comical than prescient. I will therefore restrict myself to “what if” something happens, rather than whether it will.
Therefore let us assume that the discussions on the “Greenland-style” option under which Scotland, Northern Ireland and Gibraltar stay within the EU, but England & Wales leave, is not viable. Similarly, there is no second referendum, no legalistic block and no second coming. The UK Government serves its Article 50 notice and the countdown clock commences.
Single Market
If the UK, and therefore Gibraltar, remains part of the Single Market, the directives and regulations to which we are currently subject remain in place. Freedom of service and freedom of establishment (Passporting) for financial services with the Member States continues, and it is business as usual.
However, if the UK enters into a different relationship with its European neighbours, things will change and choices will need to be made. A free trade agreement (in whatever form) such as the much quoted,
but seldom read, one between the EU and Canada, will not require full implementation of EU legislation, it is more likely to require “equivalence” with it. To understand what equivalence means, remember the last time you hired a car. The picture on the website shows a brand new Ford Focus, the small print below it says “or equivalent”. The Kia that you are subsequently given the keys for is the “or equivalent”. Similar, but somehow just not the same.
This ability to be equivalent rather than the same provides an opportunity for the UK to be somewhat more flexible and have greater autonomy in the precise content of its legislation. The UK could also choose to adopt different rules for dealings with the EU to those it has for dealing with its other trading partners.
UK Financial Services & Markets Act Unfortunately there is a problem. Virtually all UK financial service legislation has an EU origin, over forty years of membership has seen to that. EU compliance has not simply been grafted onto UK legislation; it is the very fabric of it. The same is true of Gibraltar. The task of deciding which bits to keep and which to discard will be a monumental one. At the same time, if the equivalence requirement is in place, will there be a constant dialogue with the EU determining what is or is not essential for the equivalence test to be met? This would be a painful and long process for one EU directive, imagine doing it for all of them, at the same time. Any benefits from this flexibility will mainly arise at a glacial pace.
For Gibraltar there is an extra issue. Our rights of access into the UK financial services market derive not from the EU but from the UK Financial Services & Markets Act. This currently permits access where we have transposed the applicable EU directive. What will replace this? Will we be subject to a similar equivalence test by the UK as the UK will with the EU?
Of course, we could have transitional provisions, but what about when the UK changes their legislation? Will we have to follow suit? To what extent will we simply
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Gibraltar International
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