There needs to be a standalone financial services agreement between the European Union and the United Kingdom post-Brexit, according to Fine Gale MEP Brian Hayes.

Mr Hayes – who has published a draft European Parliament report on the EU’s relationship with third countries in the area of financial services – says the "time is right to completely reform our equivalence rules, particularly in light of Brexit.

"The EU’s equivalence regime allows for third country financial institutions to have limited access to the EU single market to sell non-EU products and services.

"However, the EU equivalence regime, in its current format is piecemeal and is in no way comparable to passporting rights."

Mr Hayes says that if the UK is "realistically planning to rely on equivalence as the platform for post-Brexit single market access for the City of London, then we will have serious problems for financial services cooperation between the UK and the rest of the EU. It is a very limited form of access".

In the draft report, he says this is particularly important for Ireland "given how interconnected the IFSC is with the City of London".

According to the Fine Gael MEP, the EU’s current equivalence regime is "not fit for purpose" because there is no "consistency on equivalence as it is decided on a case-by-case basis according to each EU legislative act".

He also calls for "ongoing monitoring" of third countries to ensure their regimes are adhering to EU legislation.

The draft report will be negotiated over the next two months and is set to be voted on by all MEPs in September.