The UK is an open, globally oriented financial centre. The EU is a structurally significant partner and is one of several critical relationships alongside the United States, Switzerland and others.

All of these relationships underpin the UK's role as a leading international financial centre. Our engagement with the EU must be seen in that broader context and policy choices in this relationship must preserve the UK's ability to remain competitive globally whilst also supporting its economic growth agenda. 

Our central argument is that the EU remains one of the UK's most important financial services partners and the strategic-level reset in UK–EU relations is a welcome development. However, financial services have not yet been integrated into that agenda in a meaningful way. The key recommendations in our response are: 

• The fundamental challenge is not UK-EU divergence per se. Both the UK and the EU are sovereign jurisdictions with the right and the responsibility to set their own rules. The problem is unintended divergence where outcomes are fully aligned but a lack of regulatory coordination produces unnecessary friction, cost and complexity for firms and end users on both sides of the Channel. 
• Dynamic alignment (understood as automatic UK alignment with future EU regulatory changes) is not appropriate for financial services. It would undermine the UK's ability to respond proportionately to its own markets, constrain engagement with other major financial partners and limit the UK's ability to shape international standards. The UK Government has itself recognised this and we agree with that position. 
• The focus should shift from unilateral equivalence or overseas recognition to cooperation. Equivalence is one tool, but views on its feasibility and benefits are divided. It also cannot substitute for a deeper structural relationship. A more productive approach centres on enhanced supervisory and regulatory cooperation, reducing unintended divergence through early coordination and building interoperability between frameworks. 
• Over the next 18 months, progress in the UK–EU financial services relationship will require clear political leadership, and the annual UK–EU Leaders’ Summit should act as the central forum for setting priorities and mandating delivery in the financial services space. Enhanced technical cooperation should then flow from this top‑level direction.  
• UK Finance will be publishing a dedicated report on the long-term vision for the UK–EU Financial Services relationship on 8 June 2026, which will set out our analysis and recommendations in greater detail. We commend this to the Committee as a companion to this evidence and would welcome the opportunity to present its findings.