European Commission Communicates on Financial Services Equivalence

The European Commission has published a Communication on equivalence in the area of financial services, including an annex that briefly sets out the equivalence decisions adopted by the Commission since January 2018. The Communication describes the Commission's current equivalence policy priorities, recent legislative improvements and the main assessment and the decision-making processes. It also sets out recent and ongoing work on equivalence assessments and monitoring.

Notably, the Commission refers to discussions on the need to improve the EU's approach to determining equivalence and states that it is "generally accepted" that it would be very challenging to implement a uniform assessment and decision-making process for all of the financial services areas that include equivalence provided that certain common principles are respected, including proportionality, a risk-sensitive approach to determining equivalent outcomes and transparency. The Commission also notes the need for arrangements to be put in place to ensure the monitoring of equivalence compliance and states that monitoring should be focused on: (i) changes in the EU legislative framework; (ii) high-impact areas or third countries; (iii) the impending review or expiry of an equivalence decision; and (iv) market developments.

The priorities in the equivalence area are noted as being statutory audit and benchmarks and it is highlighted that the transitional provision in the EU Benchmark Regulation that allows third-country benchmarks to be used in the EU without the third-country benchmark being deemed equivalent, recognized or endorsed is being extended to 2022.

View the Communication.

View the annex to the Communication.

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