The Berne Financial Services Agreement: A New Era for UK-Swiss Market Access

Background

The UK and Switzerland have long enjoyed a robust economic relationship, underpinned by their status as two of the world’s leading financial centres. Since 2016, both countries have engaged in an annual Financial Dialogue, discussing shared interests and exploring avenues for deeper cooperation. The impetus for the BFSA arose from a shared commitment to open, resilient financial markets and the recognition that traditional, line-by-line equivalence assessments for cross-border financial services were increasingly burdensome and outdated.

In June 2020, a ministerial Joint Statement set the stage for negotiations, with the aim of establishing a framework based on mutual recognition of each other’s regulatory and supervisory regimes. The objective was to facilitate the provision of financial services to wholesale and sophisticated clients, reduce regulatory frictions, and create structures and safeguards to underpin this supply. The BFSA was shaped by extensive consultations with industry stakeholders in both countries, ensuring that it delivers tangible commercial benefits and reflects the needs of market participants.

On 21 December 2023, the UK Government announced that it had signed the BFSA, calling it a ‘ground-breaking agreement’ which would enhance cross-border market access of financial services between the two countries.

Mutual Recognition

At its core, the BFSA is an ambitious outcomes-based bilateral mutual recognition agreement (MRA) in financial services. Unlike many existing trade agreements, which are often static and limited in scope, the BFSA is designed to be dynamic and ‘living’, allowing for future expansion and adaptation as new opportunities arise.

The key component of the BFSA is that traditional equivalence assessments are replaced with an outcomes-based system of mutual recognition. This approach allows both countries to maintain their own standards for financial stability and investor protection, while recognising the sophistication and effectiveness of the other’s regulatory regime.

Mutual recognition is granted on the basis of three different categories of commitments: so-called ‘deference’ commitments,  regulatory cooperation where cross-border supply is already liberalised subject to domestic law and other (bespoke) arrangements.

Deference

A central concept within the BFSA is ‘deference’. Under this principle, one country (Country A) defers to the relevant standards of the other (Country B) when it determines that the latter’s regulatory and supervisory objectives are comparable. This means that financial services suppliers from Country B can provide services into Country A without needing to comply with a separate set of rules, provided they continue to meet the standards of their home jurisdiction. Deference is underpinned by robust cooperation, information sharing, and supervisory tools, ensuring that risks can be effectively managed and that authorities retain the ability to intervene if necessary.

Sectoral Coverage and Market Access

The BFSA covers seven sectors, all on a wholesale basis. These are: asset management; banking; financial market infrastructures (central counterparties (CCPs)); financial market infrastructures (over-the-counter derivatives); financial market infrastructures (trading venues); insurance for wholesale and sophisticated high-net worth clients; and investment services. Each annex to the BFSA defines the covered services; the covered service suppliers; and the covered clients in each sector, and the recognition rules that apply. The rules governing the provision of services in each sector are laid out in annexes to the BFSA, with different levels of mutual recognition commitments applying to each.

Deference commitments in the BFSA cover CCPs, and aspects of insurance and investment.

Insurance

One of the most significant achievements of the BFSA is the unprecedented access it provides for UK insurers and intermediaries to the Swiss domestic insurance market. For the first time, UK insurance firms will be able to offer a wide range of wholesale services—such as renewable energy, directors’ and officers’ liability, warranty and indemnity, and cyber insurance—directly to Swiss corporate clients. These commitments are based on deference, meaning UK insurers can rely on UK regulation and supervision, with significantly reduced Swiss regulatory requirements. Moreover, the BFSA secures an important exemption for UK insurance brokers from Swiss localisation requirements that came into effect in 2024. While brokers from other jurisdictions will need to establish a local presence in Switzerland, UK brokers can continue to operate cross-border.

Investment Services

The BFSA builds on existing access UK firms have to the Swiss investment services market, introducing commitments to stabilise and maintain these access routes. Notably, client advisers acting on behalf of UK firms will no longer need to register with Swiss authorities or undergo local examinations, streamlining the process of providing services to Swiss clients.

For Swiss investment services firms, the agreement offers a forward-leaning access framework to the UK market, with improvements over existing arrangements. The BFSA includes deference commitments allowing Switzerland to supply services into the UK. This means that Swiss investment firms can supply wholesale and high-net-worth clients in the UK without needing to comply with UK authorisation and prudential measures. However, this route cannot be used simultaneously to existing mechanisms like the overseas persons exclusion to provide the same service. Swiss firms will still have to meet certain UK requirements, such as being placed on an FCA register; apply the relevant tests to determine if a client is high-net-worth; and report certain types of information to the relevant UK regulators.

Corporate Banking

The BFSA covers deposit taking and lending services for corporate clients. Cross-border supply is already permitted by both the UK and Switzerland, and so regulatory cooperation is introduced to stabilise existing access. It also envisages a Memorandum of Understanding between the UK and Swiss central banks regarding banking resolution arrangements, enhancing cooperation and confidence in times of financial distress.

Asset Management

The UK and Switzerland already have open regimes for the marketing of funds to professional and high-net-worth clients. The BFSA ensures that this openness will be maintained, supporting the UK’s status as a leading global centre for asset management. The agreement also commits to maintaining open channels for portfolio delegation, allowing asset managers in both countries to access the best expertise available.

OTC Derivatives

The UK is the world’s largest market for OTC derivatives, accounting for over 45% of global turnover in interest rate derivatives. The BFSA recognises the risk mitigation rules of both parties, allowing counterparties to choose which set of rules to apply.

Financial Market Infrastructures

Currently, UK CCPs looking to provide services into Switzerland must seek authorisation from the Swiss Financial Market Supervisory Authority (FINMA). This involves an assessment of an individual CCP applying and a consideration of the UK’s regulatory and supervisory regime.

At the end of the Brexit Transition Period, HM Treasury established a temporary recognition regime (TRR) in regulations 11 to 26 of The Central Counterparties (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2018, which allowed CCPs that were entitled to operate in the UK at the end of the Transition Period to continue doing so. As such, individual Swiss CCPs that were providing services into the UK before the end of the Brexit Transition Period are currently doing so under the TRR.

Under the BFSA, both parties have recognised domestic authorisation and prudential arrangements that apply to the relevant suppliers. This means that UK suppliers seeking to provide services into Switzerland will not have to undergo this part of the process in FINMA’s assessment. They will still be subject to an individual assessment by FINMA. The same process applies to Swiss CCPs: individual CCPs seeking to provide services into the UK market will still need to seek recognition from the Bank of England, but this process need not now include an assessment of the relevant regulatory and supervisory regime.

Safeguards and Regulatory Cooperation

To deal with the possibility that both the UK and Swiss regimes will update their rules, and possibly diverge over time, the BFSA sets up structures for regulatory cooperation and mechanisms to exchange information. Each party commits to notify the other of any relevant proposed measure as early as possible, and certainly no later than the beginning of any domestic stakeholder consultation. The notified party may then request additional information and make observations to facilitate their counterpart in taking their interests into consideration and to foster mutual understanding. Should either party feel that a more in-depth consultation is required, this can be requested via consultation in a Joint Committee established to oversee the administration and monitoring of the BFSA.

Importantly, recognition will continue to apply regardless of new measures imposed, unless countries decide to withdraw recognition via the processes set out in the BFSA. There is a safeguard contained in the BFSA which allows either party to take unilateral steps in the event of severe or urgent circumstances to protect investors, depositors, policy holders or to maintain the safety, soundness, integrity or financial responsibility of the financial services suppliers and to ensure the integrity and stability of the financial system of the party.

Where either party wishes to withdraw recognition, they will have to go through a withdrawal and wind down process. This process only applies to sectors where deference commitments have been made. The withdrawal process is sector-specific and this process will not affect the operation of the rest of the BFSA. Once a party submits a ‘Notice of Intent’ to withdraw with appropriate reasons, the parties immediately enter into a consultation process with a view to resolving the issue in a mutually agreeable manner. There is recourse to mediation under a dispute settlement mechanism. However, if no mutually agreeable solution is found the original party may issue a ‘Notice of Cessation’ which initiates the wind down process. This involves a consultation period of 30 days in which firms using the BFSA may be consulted.

Future coverage

Unlike many international agreements that may be fixed at the time of signing, the BFSA includes a mechanism for expanding its sectoral coverage. This can be done at any time, not just during formal review points, so that new opportunities for mutual benefit can be seized as they arise. Sustainable finance is already identified as a priority area for future cooperation. The UK has committed to negotiating mutual recognition of rules and standards for mandatory climate-related corporate disclosures.

Implementation

Section 24 of the Financial Services and Markets Act 2023 (FSMA 2023) makes specific provision for the UK to agree and implement mutual recognition agreements. Affirmative instruments will need to be tabled to give effect to the provisions of the BFSA. These regulations will grant regulators the powers they will need to implement the BFSA and create new mechanisms to allow HM Treasury to determine market access. In addition, the UK (and Switzerland) will also need to grant regulators the powers to implement the safeguards set out in the BFSA. This will happen via secondary legislation.

On the day of the Chancellor’s Mansion House speech, 15 July 2025, HM Treasury updated its webpage on the BFSA announcing that the Government was laying before Parliament two draft statutory instruments to implement the UK’s commitments under the BFSA and that both parties were committed to ensuring that the BFSA was fully implemented by the end of this year so firms could start registering to use the BFSA on 1 January 2026.

The two draft statutory instruments were:

• The Financial Services and Markets Act 2023 (Mutual Recognition Agreement) (Switzerland) Regulations 2025. Among other things these draft Regulations:
  • Make legislative changes to permit eligible Swiss firms to offer cross-border investment services to wholesale and sophisticated high net worth clients in the UK by relieving them of the obligation to comply with UK authorisation and prudential measures.
  • Amend domestic UK law, using powers provided under sections 246, 84(2) and 84(3) of FSMA 2023, to give legal effect to the commitments made in the BFSA, and any potential future amendments to it. In particular, the draft Regulations introduce a number of new functions, powers and duties for the UK regulators (which includes the Bank of England) equipping them with the tools necessary to fulfil their roles under the BFSA. This includes requiring the UK regulators to support HM Treasury to perform its functions related to: (i) the functioning of the BFSA, (ii) the handling of disputes concerning the BFSA, and (iii) managing any arrangements for the winding down of Swiss firms (for example, in the event of recognition being withdrawn or the BFSA is terminated).
• The OTC Derivatives Risk Mitigation and Central Counterparties (Equivalence) (Switzerland) Regulations 2025. These draft Regulations:
  • Set out HM Treasury’s determinations that Switzerland’s regulatory and supervisory regimes for risk mitigation for OTC derivative contracts and for CCPs are equivalent to the UK’s. The OTC derivative equivalence determination enables UK firms transacting with Swiss counterparties to meet UK risk mitigation standards for OTC derivative contracts by relying on Swiss risk mitigation standards. The CCP equivalence determination enables Swiss CCPs to provide clearing services to UK clearing members and trading venues without needing to comply with UK authorisation and prudential measures, subject to recognition of individual Swiss CCPs by the Bank of England.

A more granular timetable is provided on the FCA’s website:

• September 2025 - Supervisory cooperation Memorandum of Understanding signed and consultation on FCA Handbook changes to implement the BFSA.
• November 2025 - Detailed operational guidance to be published on regulator websites.
• Early 2026 - Following ratification by the UK and Switzerland, the BFSA will enter into force and firms may begin notifying.

How can firms express their interest

On 23 July 2025, the FCA issued a new webpage stating that it was inviting UK and Swiss firms to submit interest in providing cross-border services as part of the BFSA. Firms were asked to submit an expression of interest to the FCA so that they could receive future updates and information.

Firms were advised that they could apply via the FCA’s Connect system. The FCA also set out further information for UK and Swiss firms. For the form, UK firms will need to:

• Provide their firm name, firm registration number (FRN), contact and the classes of insurance they wish to provide in Switzerland.
• Confirm they are eligible for the BFSA.
• Declare they will comply with the conditions set out in the BFSA.
• If successful, within 30 days, the FCA/Prudential Regulation Authority will confirm that the firm is eligible and of good standing to the FINMA.
• FINMA will acknowledge receipt and put the firm’s details on its BFSA register within 30 days, at which point the firm can begin to provide insurance services in Switzerland. The firm will be notified when they have been added to the FINMA register.

The FCA also noted that:

• UK insurance intermediaries - Starting 1 January 2026, professional requirements for insurance intermediaries will have to be obtained in Switzerland in line with FINMA's minimum standards. The Vocational Training Association of the Insurance Industry will be responsible for verifying skills and competences in this regard.
• New market access - Insurers must have no or limited life insurance business, employ staff with relevant knowledge of Swiss insurance legislation, and be subject to Solvency II regulatory requirements (unless they are a UK branch of a Swiss entity). They must meet solvency requirements without capital relief measures and fulfil their company specific management buffer requirement.
• UK investment firms - Before supplying services, the firm must first notify the FCA that it wishes to provide specified services through client advisers in Switzerland and must provide clients with a disclosure document according to Annex 5 Section IX.B.2 of the BFSA.

For Swiss firms the FCA notes that they will need to notify FINMA via the FINMA survey and application platform (EHP). For the form, such firms will need to:

• Provide their name, FRN, contact details and the services they wish to supply into the UK.
• Declare they meet the eligibility criteria in Annex 5, paragraph III, IV, A of the BFSA.
• If successful, FINMA will confirm that the firm is eligible and of good standing to the FCA within 60 days.
• Upon receipt of FINMA’s confirmation, the FCA will place the firm on its public BFSA register within 30 days, at which point the firm can begin supplying services in the UK. Firms will be notified once they've been added to the register.

Among other things the FCA also notes that:

• Swiss investment services firm with a UK presence providing services to UK high net worth clients - Firms with an existing UK presence can still supply services covered under the BFSA, however this cannot be done through their UK-authorised branch. It must be through their Swiss-based entity.

Further information on the Swiss process

For further information regarding the Swiss perspective of the BFSA please refer to the briefing note Berne Financial Services Agreement between Switzerland and the United Kingdom by Pestalozzi Attorneys at Law.

How we can help

For Swiss firms seeking to use the BFSA to enter the UK market we can help them navigate the requirements set out by the BFSA and the UK regulators to ensure they meet the relevant regulatory requirements and for investment firms we can also advise on the pros and cons of the overseas persons exclusion compared to the BFSA. In addition, while the BFSA assists with licensing, firms carrying on cross-border activities may still need to consider certain aspects of the legal framework in the ‘host’ jurisdiction, depending on the services being provided. In the UK context this includes the financial promotions regime for client communications.