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UPDATE 2-City of London will have "less fluid" trade with EU, says EU official

* Fin services to be less fluid even if trade deal-McGuinness

* EU has no clear answers yet from UK on new rules-McGuinness

* EU mustn’t be too dependent on third country -McGuinness (Adds more comments)

BRUSSELS, Oct 2 (Reuters) - The flow of financial services between the European Union and Britain will be less fluid from January whatever happens in talks on a future free trade deal, the EU’s financial services chief designate said on Friday.

Britain left the EU last January and unfettered access to the single market under transition arrangements ends on Dec. 31.

Brussels and London are in talks on a free trade agreement, though financial services are being handled separately.

“Under all circumstances, deal or no deal, trading in financial services will be different and less fluid as of the first of January next year,” Mairead McGuinness told the European Parliament.

If confirmed by the parliament, McGuinness will lead the European Commission’s work that will decide how much EU access the City of London will have from January.

“We need to avoid being overly dependent on a third country for key financial services,” she said in a confirmation hearing on her appointment as financial services commissioner.

McGuinness said the EU currently does not have sufficient knowledge to decide on market access for UK financial services beyond the 18 months granted for UK clearing houses from January.

She said the EU has asked Britain for “clear answers” on its “vision” for its financial sector to gauge how far it wants to diverge from EU rules, and therefore potentially no longer be “equivalent” to the bloc’s standards - a condition for EU access.

“It’s extremely difficult to grant equivalence without knowledge,” she said.

“Is it right, financially prudent to rely on a third country for the location of vital services? In my view we need to take a precautionary approach to build up our own structures.”

McGuinness, a veteran Irish member of the European Parliament, also commented on the collapse of German payments company Wirecard after a 1.9 billion euro ($2.23 billion) hole in its balance sheet.

The Wirecard collapse has prompted the European Commission to revisit the question of more common supervision in markets, which EU states had pushed back in the past, fearful of losing more regulatory sovereignty.

“The Wirecard scandal is a shocking tale of fraud and failure of supervision,” McGuinness said.

“We need to take a long hard look at what went wrong there and learn the lesson... It’s such an enormous issue.” ($1 = 0.8535 euros) (Reporting by Huw Jones in London Editing by Alison Williams, Tomasz Janowski and Susan Fenton)

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