Berne meets Basel via Brussels - How access rights under the Berne Financial Services Agreement compare to CRD VI
Written by
RegCORE Client Alert | EU Digital Single Market | The EU beyond Brexit
QuickTake
On 1 January 2026, the Berne Financial Services Agreement (BFSA) entered into force. The BFSA is a bilateral treaty between Switzerland and the UK, designed to facilitate cross-border wholesale financial services (primarily investment services and insurance) between the two jurisdictions on a mutual recognition (“deference”) basis.Announcement and underlying materials available here.Show Footnote
In practical terms, it is a market-access instrument that permits cross-border activity without a host-state licence in the covered sectors, but only within a tightly defined perimeter (eligible firms, eligible clients, eligible instruments/services) and with a supervisory “safety valve” through dialogue and host intervention if risks crystallise.
The BFSA is built on the principle of mutual recognition of regulatory outcomes, meaning that each party recognises the other's domestic authorisation and prudential regimes as achieving equivalent regulatory objectives in specified sectors. This approach is underpinned by robust supervisory cooperation, including formalised arrangements for information exchange, joint oversight and host intervention powers in cases of systemic risk or non-compliance.
Importantly, the BFSA does not operate in isolation. For groups with European Union (EU) operations, its benefits must be assessed against the backdrop of the EU’s enhanced third-country framework under the Capital Requirements Directive VI (CRD VI) and the Capital Requirements Regulations III (CRR III), which has impacts to and from Switzerland inasmuch as it does vis-à-vis the UK. In particular: (a) the BFSA recognition does not mitigate or displace EU third-country branch regimes; (b) it does not relax EU expectations on booking models, substance or consolidated supervision; and (c) reliance on BFSA-enabled structures may attract heightened scrutiny from EU supervisors. The published UK and Swiss guidance on the BFSA does not alter this position. Firms should therefore avoid treating BFSA access as a workaround to EU regulatory constraints. The BFSA provides tangible market-access relief only for UK ↔ Swiss cross-border activity and only when the supplier is a UK or Swiss entity registered for the relevant BFSA Annex. EU firms cannot rely on the BFSA directly. An EU group can, however, obtain indirect relief by:
- using a Swiss subsidiary to access UK wholesale clients under the BFSA, or
- using a UK subsidiary to access eligible Swiss clients under the BFSA.
This can materially reduce UK/Swiss host licensing frictions for the bilateral leg, but it does not relax EU requirements on governance, outsourcing/delegation, consolidated supervision, risk booking, or (for EU facing business) CRD VI.For investment services and asset management, EU rules permit extensive delegation and servicing from the UK/Switzerland, subject to existing third country cooperation and oversight conditions. For banking, CRD VI does not constrain EU banks’ outbound services to third countries but does constrain inbound EU business being conducted from third country entities. Additional alleviation may exist in market infrastructure (use of recognised UK/Swiss CCPs and venues) and portfolio management delegation. By contrast, retail insurance and consumer access remain tightly host law driven.Show Footnote
Despite the above, the BFSA in many areas differs conceptually from the EU’s CRD VI regime. As explored in dedicated thought leadership from PwC Legal’s EU RegCORESee here and here.Show Footnote, Article 21c CRD VI introduces a general prohibition on the direct provision of “core banking services”—namely deposit-takingWhich includes “taking deposits and other repayable funds”.Show Footnote, lendingWhich includes “consumer credit, credit agreements relating to immovable property, factoring, with or without recourse, financing of commercial transactions (including forfeiting)”Show Footnote and guarantees/commitments—by third country undertakings (TCUs) into the EU, unless the TCU establishes an authorised (i) EU incoming third country branch (TCB) or (ii) subsidiary in the relevant EU Member State. To put it differently, Article 21c CRD VI clarifies the general prohibition of direct provision of core banking services into the EU directly from third countries - i.e. without a TCB or a subsidiary in the EU as well as clarifying and harmonising several exemptions and carve-outs.Importantly the Article 21c CRD VI regime includes several exemptions and carve outs – please see PDF for further details.Show Footnote Article 21c CRD VI is a significant shift towards a harmonised, explicit authorisation requirement for third country banking services, aiming to ensure regulatory oversight and financial stability within the EU.
This Client Alert assesses the legal and regulatory impact of the BFSA and the CRD VI, the differing rules on market entry, client solicitation, distribution and the key considerations both in contractual, policy documentation and other relevant arrangements relevant to market access as both regimes continue to be rolled out.
