James Walsh, Policy Lead: EU & International, Pensions and Lifetime Savings Association has today (Wednesday) commented on the appointment of Michel Barnier as the European Commission's chief negotiator:
“The appointment of Michel Barnier as the European Commission's chief negotiator confirms that the negotiation process for the UK leaving the EU will be challenging – not that this should come as any surprise. This move exposes the very different approaches being taken within the EU to the Brexit negotiations, with President Juncker playing hardball and Chancellor Merkel signalling a more accommodating approach. The whole process will be highly political.
“Our previous experiences with Mr Barnier as Commissioner showed that his most consistent concern was to inject more transparency and accountability into the markets - this is a concern which we can expect him to carry into his new role. As a result we should expect him to insist on a high level of continuing UK compliance with legislation such as MIFID II, EMIR and AIFMD in return for meeting any demands from the UK. In practice, it has always been likely that the UK would comply with most of this legislation regardless of the outcome of the EU referendum. We don’t believe it’s in anyone’s interest to have major differences in financial regulation across what are now global markets.
“With regards to pensions-specific issues, the key questions remain the same. First, to what extent will the UK be required to implement the new IORP Directive? This was always going to be a matter for the negotiations but, in practice, the new Directive would not require major changes to the way UK schemes operate, and many of the implementation issues would be decided at national level. Second, will the Holistic Balance Sheet be taken forward? The European Commission has recently ruled this out and there is no indication of that changing now Vice-President Dombrowskis is in charge of this area. We do not expect the Brexit negotiations to make any difference here.”