Britain and Switzerland signed a wide-ranging financial services deal on Thursday granting reciprocal market access for their banks, insurers, asset managers and stock exchanges to boost trade and cut compliance costs.

After two years of talks which began after Britain left the European Union, the deal - which will require British and Swiss parliamentary approval - is based on mutual recognition of rules and supervisors, easing regulatory burdens.

The deal gives a boost to Britain's financial services industry, which has had to look further afield for business after Brexit largely cut it off from the EU, which had been its biggest customer.

British finance minister Jeremy Hunt travelled to Bern to sign the deal with his Swiss counterpart Karin Keller-Sutter.

"The Berne Financial Services Agreement is a global first and builds on the UK and Switzerland's strengths as two of the world's largest financial centres," Hunt said in a statement.

"It will also help level the playing field for smaller firms, who will no longer have to invest time and money in navigating unfamiliar Swiss rules."

The agreement is also a boost for Switzerland, which has never joined the EU and was the world leader in cross-border wealth management for private clients in 2022, with holdings of 2.2 trillion Swiss francs ($2.6 trillion).

Switzerland, like Britain, has been seeking to renegotiate its relationship with the EU, its biggest trading partner and one which often requires its European neighbours to submit unilaterally to its rules.

"This agreement helps to retain and boost the international competitiveness of the Swiss financial centre in the long term,” Keller-Sutter said.

Mutual recognition refers to financial regulators in both countries deferring to each other's rules to allow financial firms to operate in either market while following just one set of rules and without necessarily having to always open a second office.

The deal represents a far higher level of reciprocal trust in each other's regulators than the EU has been willing to show to Switzerland or to Britain since Brexit.

The EU has insisted on using a unilateral and stricter rule-by-rule assessment, known as equivalence, for determining whether British, Swiss or other "third country" financial services businesses can have direct access to the bloc without having to open a branch or subsidiary in the EU.

BOOST FOR ASSET MANAGERS AND INSURANCE BROKERS

Under the new deal, existing cross-border regulatory practices between Britain and Switzerland in financial services will be formalised and expanded in some areas of banking and insurance.

The agreement focuses on wholesale activity and private wealth management, and excludes smaller retail customers.

For insurers, it covers some non-life insurance business for big company clients, but life, accident, health and most liability insurance is excluded.

Insurance brokers in Britain will no longer have to open a branch in Switzerland under a new requirement for foreign insurers that starts next month.

Swiss banks will be allowed to offer cross-border investment services directly from Switzerland to clients in Britain who have assets of over 2 million pounds ($2.5 million).

UK financial advisers to high-net worth Swiss individuals will no longer have to be registered in Switzerland or sit Swiss exams.

Industry representatives welcomed the deal.

"The Mutual Recognition Agreement will deliver huge benefits for firms in terms of increased market access and stability enhancing commitments," said Chris Hayward, policy chairman at the City of London Corporation, which administers the historic financial district.

The Swiss asset management and banking associations, as well as the country's main stock exchange, said the deal was unique in its scope. Britain is one of Switzerland's biggest export markets for cross-border wealth management.

"For Swiss banks, the agreement will above all bring improvements and legal certainty in the needs-based servicing of wealthy private clients, who make up a large part of the cross-border banking business," they said in a joint statement.

($1 = 0.8583 Swiss francs)

($1 = 0.7899 pounds) (Additional reporting by Sinead Cruise in London Editing by David Milliken and Mark Potter)