The End is Nigh – the End of Passports

Not the travelling kind but the financial services kind.

As a mortgage broker, this may never have affected you, but since everything in our industry is connected, I thought I'd keep you informed.

The European Union has just announced their COVID Passport, allowing European citizens to travel unhindered across its internal borders only if they have been vaccinated and tested. Brilliant, you might say, my Dad is delighted. He lives in Cognac, France and is keen to travel to Spain or Italy without being cooped up in his room for five-plus days.

This doesn't affect us here in the UK since we left the EU on 31st December 2021.

At the same time, we also left the passport system for financial services, but most normal folk didn't register. And most mortgage brokers have been so busy it doesn't even worry them. But it should. Let me explain.

The EU has always wanted to promote a single market in financial services to encourage cross-border trade and commerce. It left individual countries to regulate itself and occasionally advised with its Directives but relied on the Bank of England, the Government and FCA to get its own house in order. We did so, performed it superbly, so leaving the EU didn't change things because every rule was UK law.

This is why your mortgage business was unaffected by the EU departure, although your stock of German beer or French cheeses was held up at the border.

To allow firms to trade across borders, the EU created the "passport" system, which helps firms regulated in one country to trade in other countries. Simple and effective. But this came to an end in 2020.

With nothing to replace it apart from interim deals, the City of London's trade started to drift across the Channel. You've probably read about thousands of jobs being lost and calamity, disaster and locust infestation about to hit the bigwigs in the city.

Admittedly over £5 billion in share trades have been lost, and countless city firms and businesses have opened up offices in Paris and Frankfurt to be allowed to carry on their transactions.

They are now looking to Rishi Sunak and the British Government to do a deal with the EU. Called Equivalence, it hopes to have something similar to the passport arrangements.

But the negotiations are not going well, and Rishi announced this week that the UK would go it alone and sort their industry out and ignore the EU. The opportunity is set to create something new, worldly and innovative to make the UK a modern, open and transparent world leader in financial services.

This is brinkmanship; it's how these negotiations "role". It would be best if you kept posted on this as it will affect the sector. Everything is connected.

And the only passports allowed now enable Germans to visit Spanish Beaches when we're still held on the red light. They certainly won't need to put their towels out on the sunbed at 5 am anymore; there will be few Brits competing against them this Summer.

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