Sunak calls in top City lawyers to help slash post-Brexit red tape

Rishi Sunak has called in top City lawyers to explore overhauling an EU-era rulebook to make it easier for foreign firms to do business in the Square Mile post-Brexit. 

The Treasury has brought in lawyers from Hogan Lovells to advise on reforms to the UK’s “overseas framework”, which governs the ability of foreign businesses that are not registered or regulated by the City watchdog to provide financial services to UK clients. 

Ministers are examining proposals to reduce barriers to the rules in order to boost London’s position as a global financial centre by enabling more international companies to be granted access to the City.  

The Treasury quietly conducted a “call for evidence” last year on the framework and is expected to launch a consultation on proposed reforms in the coming weeks. 

One of the areas being looked at is the so-called “overseas person exclusion”, The Telegraph understands, which allows foreign companies to access the UK’s financial markets without requiring any form of authorisation or registration from the Financial Conduct Authority. 

The mechanism allows UK firms to access the services of overseas companies, while also enabling British companies to provide services to overseas clients who do not have a permanent place of business in the UK.

However, City chiefs have complained to the Treasury that rules around the exemption are overly complicated and clarity is needed on certain definitions. 

Hogan Lovells previously called for the rules around the exemption to be simplified and expanded to include investment professionals and high-net-worth clients, which are currently excluded. 

The law firm was asked to advise on “in the UK test”, which concerns whether a regulated activity or service is considered to take place within or outside the UK. This has been further complicated by a shift to remote working during the pandemic, according to legal experts. 

The move marks the latest attempt by ministers to axe EU-era red tape and comes after ministers announced plans to ditch swathes of the controversial Solvency II rulebook governing insurers and overhauled London’s listings regulations. 

In December, John Glen, the City minister, told Parliament that the consultation will “consider changes to the UK’s overseas framework which will make it more coherent and easier to navigate, reinforcing the Government’s commitment to maintaining an open financial centre”.

The Treasury and Hogan Lovells declined to comment.

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