The U.K.'s Brexit proposal for financial services seeks "mutual recognition" of its regulatory and supervisory regimes and those of the EU, with a monitoring mechanism in place for any divergence, the Financial Times reported, citing "three senior figures briefed on Brexit discussions in the cabinet."
The proposal is a "dynamic reciprocal mutual recognition model," one of the sources said. It would also entail the creation of a dispute resolution mechanism to resolve conflicts or divergences between EU and U.K. financial rules and regulations.
The plan, billed as an alternative to the EU's "equivalence" model for so-called third countries, reportedly has the backing of the U.K. government and Bank of England Governor Mark Carney. It was also described by the CEO of lobby group TheCityUK, Miles Celic, as "our plan A, plan B and plan C for about 12 months or more."
The proposal was designed by the International Regulatory Strategy Group, which represents the U.K. financial sector, but it has already been rejected by European Commission officials, according to reports in late January. The EC has been steadfast in its contention that the U.K. must revert post-Brexit to relying on the equivalence model, under which EU officials determine whether a country's regulations are equivalent to its own and retains the power to cut off access if it deems appropriate.
Chancellor Philip Hammond may put the proposal forward in a speech early in the week of Feb. 19, although "allies" of the chancellor said a final decision is yet to be made, the FT reported.