Status of key initiatives:
What is it?
A three year review of how financial services policy and regulation are made in the UK.
What does it say?
Two consultations proposed a model in which UK financial services regulators lead on developing regulatory requirements for firms, subject to arrangements allowing for accountability to and scrutiny by HM Treasury and Parliament. To achieve this, a programme is underway to move retained EU law to the regulators’ rulebooks.
What happens next?
A policy statement on building a smarter financial services regulatory framework closed the review in December 2022. The outcomes are implemented via the Financial Services and Markets Act.
Read our note on the policy statement on our knowledge portal.
What is it?
An Act which implements the outcome of the future regulatory framework review.
What does it say?
The Act gives HM Treasury and the regulators powers to rewrite EU-derived legislation relating to financial services, complementing a separate Retained EU Law Act. The Act allows for the introduction of a new Designated Activities Regime, a critical third party regime, and the regulation of a wider range of cryptoassets. It also makes shorter term changes under the Wholesale Markets Review.
What happens next?
The Act received royal assent on 29 June 2023.
Read: Retained EU law revocation and reform
Read: Financial Services and Markets Bill sets future for UK regulation
What is it?
A package of reforms released alongside the Chancellor’s Mansion House speech on 10 July 2023.
What does it say?
The policy papers include more detail from the government on its plan for delivering a smarter regulatory framework, draft statutory instruments including one on a new public offers regime and changes to investment research.
What happens next?
A table in the smarter regulatory framework specifies the workstreams which the government aims to deliver in 2023.
Read: Mansion House Reforms aim to deliver a smarter regulatory framework
What is it?
A package of announcements made by the government in December 2022 to reform financial services regulation.
What does it say?
The announcements include Treasury-led reviews into the ring-fencing regime and Senior Managers and Certification Regime, an independent review into investment research, consultations on PRIIPs and consumer credit reform, and a call for evidence on the short selling regime.
What happens next?
Several of the announcements trailed further consultations which have opened in 2023. Get in touch with your Linklaters contact to request a status update tracker covering all the Edinburgh Reforms.
What is it?
Wide-ranging legislation intended to maintain the competitiveness of the UK financial services sector.
What does it say?
The Act gives HM Treasury and the regulators powers to set new rules in a wide range of areas. These include setting prudential standards to implement Basel III and the IFPR, creating a new Overseas Fund Regime, and overseeing the transition away from LIBOR. There are also changes to the regimes for PRIIPs, market abuse, EMIR and payments.
What happens next?
The Bill was enacted on 29 April 2021.
Read our briefing for a summary of the Financial Services Act.
What is it?
HM Treasury is assessing the ways in which overseas firms can access UK financial markets to see if there is scope to make the overall framework for cross-border financial services more transparent, consistent and easier to navigate.
What does it say?
A call for evidence asks for industry input on how the different components of the UK overseas regime, including the overseas persons exclusion or OPE, are currently being used.
What happens next?
The consultation closed on 11 March 2021.
What is it?
HM Treasury is reviewing the rules which apply to wholesale financial markets.
What does it say?
HM Treasury has suggested wide-ranging changes such as removing the share trading obligation and double volume cap from the UK MiFID regime, revising the UK systematic internaliser and tick size regimes, and removing commodity position limits.
What happens next?
Some outcomes of the review are implemented via the Financial Services and Markets Bill which can be visualised using Linklaters Law Compare. The FCA is also making changes, for example to equity transparency requirements.
HM Treasury and FCA set out direction of travel on UK wholesale markets
Read our note on the key points from the Wholesale Markets Review.
Find out how Linklaters Law Compare can help you map regulatory divergence.
What is it?
The UK’s response to the EU’s “quick fix” changes to its MiFID II regime.
What does it say?
FCA CP21/9 proposed changes to its rules on inducements relating to research and on best execution reporting. Other changes, e.g. to costs and charges disclosures and reporting obligations, have been made via legislation.
What happens next?
The FCA consultation closed on 23 June 2021. Most of the legislative changes took effect on 26 July 2021 and can be visualised using Linklaters Law Compare.
Read our briefing on the FCA’s consultation.
Read our note on the legislative changes.
Find out how Linklaters Law Compare can help you map regulatory divergence.
What is it?
A review led by HM Treasury which is intended to ensure that regulation and infrastructure keeps pace with new payments models.
What does it say?
A call for evidence sets out the Government’s aims for payments networks in the UK, assesses how well the present system is operating and raises questions about the opportunities and risks that need to be addressed.
What happens next?
HM Treasury’s response to the call for evidence identifies four priority areas covering Faster Payments, Open Banking, cross-border payments and the regulatory framework.
What is it?
A consultation on regulating certain stablecoins and a call for evidence on the use of cryptoassets for investment purposes and the use of distributed ledger technology (DLT) in financial services.
What does it say?
HM Treasury has proposed expanding the regulatory perimeter to cover stable tokens used as a means for payment. Rules would then be applied in relation to specified activities relating to those tokens.
What happens next?
HM Treasury has confirmed that stablecoins will be regulated under the UK payments regime via the Financial Services and Markets Bill. A separate consultation will follow on wider crypto regulation.
Read our FintechLinks blogpost on the UK’s plans for flexible future crypto regulation.
What is it?
The Financial Services Act 2021 empowers the UK regulators to implement a UK version of the EU Investment Firms Regulation / Directive.
What does it say?
HM Treasury promised that the UK would adopt the EU regime in a “flexible and proportionate” manner, accounting for “specificities” of the UK financial services market. The FCA published three consultations and policy statements in the lead-up to the IFPR taking effect.
What happens next?
The UK IFPR started to take effect on 1 January 2022.
Read our note on the finalisation of the IFPR and what happens next.
What is it?
A review into the effectiveness, scope and proportionality of the Senior Managers and Certification Regime.
What does it say?
As part of the Edinburgh Reforms, the government has called for evidence on the SMCR legislation and the FCA and PRA have opened a discussion paper on the regulatory aspects of the framework.
What happens next?
The call for evidence and joint discussion paper close on 1 June 2023.
Read our briefing for a summary of the SMCR review.
What is it?
A review into the effectiveness of the UK’s rules for packaged retail and insurance-based investment products.
What does it say?
In a consultation paper launched with the Edinburgh Reforms, the Treasury proposes repealing the UK PRIIPs Regulation and replacing it with an alternative retail disclosure framework. The FCA has sought views on what this future disclosure framework should look like.
What happens next?
The Treasury’s consultation closed on 3 March 2023. The FCA’s discussion paper closes on 7 March 2023.
Government plans to revoke the PRIIPs Regulation.
FCA seeks views on retail disclosure in a world without UK PRIIPs.
What is it?
A call for evidence on the UK Short Selling Regulation.
What does it say?
As part of the Edinburgh Reforms, the Treasury launched a call for evidence on the UK’s approach to regulating the short selling of shares admitted to trading. The government wants to make sure that its approach reflects the specificities of UK markets.
What happens next?
The call for evidence closed on 5 March 2023.
Government signals openness to relaxing UK short selling regime.
What is it?
A potential post-Brexit regulatory regime for smaller banks.
What does it say?
The PRA has published a discussion paper exploring the options for developing a simpler prudential framework for non-systemic banks and building societies. Its intention is to develop a “strong and simple” framework that is fully consistent with the Basel Core Principles for Effective Banking Supervision but simpler than the Basel standards that apply to large and internationally active banks. In 2022 a consultation considered the definition of a simpler-regime firm.
What happens next?
The PRA summarised the responses to its discussion paper in December 2021 and plans to consult further in 2023.
Read our note on how the PRA expects UK banks to move beyond base camp.
What is it?
A review to identify ways to enhance the UK’s attractiveness as a place to set up, manage and administer funds.
What does it say?
A Call for Input focused on the UK’s approach to funds taxation and the regulatory framework for funds, as well as opportunities for wider reform such as the creation of a new Long-Term Asset Fund (LTAF) structure. The FCA has launched a consultation a new LTAF which would be an open-ended vehicle able to invest in assets such as venture capital, private equity, private debt, real estate and infrastructure.
What happens next?
The Call for Input closed on 20 April 2021. The FCA’s LTAF consultation closed on 25 June 2021. HM Treasury summarised responses to its Call for Input in February 2022.
What is it?
HM Treasury has been reviewing certain aspects of UK Solvency II to ensure that it is properly tailored to take account of the structural features of the UK insurance sector.
What does it say?
Following its April 2022 consultation, HM Treasury published a response document in November 2022 in which it set out an overview of its final package for reform. This package will please the industry greatly. It should also be proportionate without reducing the protection provided by financially strong insurers, although it will place a greater burden on the PRA to monitor firms that are using matching adjustment on an individual basis.
What happens next?
Although HM Treasury has said that the government will legislate as necessary to implement the new regime, no indication has been given as to timing.
Read our update for more on HM Treasury’s consultation.
What is it?
A review, chaired by Lord Hill and published on 3 March 2021, recommended ways to make London a more attractive listing venue. To take these recommendations forward, the government and the FCA have published several consultations on the effectiveness of the primary markets in the UK and the public offer and admission to trading regime.
What does it say?
The key recommendations of the UK Listings Review included permitting dual-class share structures, reducing free float requirements, amending the track record eligibility requirement and reforming the prospectus regime.
What happens next?
Some rule changes have already taken place, permitting dual-class shares structures, for example. As part of its Primary Markets Effectiveness Review, the FCA has proposed reforms to its equity listing rules which include replacing the standard and premium listing segments with a single segment with simplified eligibility requirements and leaner continuing obligations. The FCA’s latest consultation (CP23/10) is open until 28 June 2023 with a follow-up containing draft rules in autumn 2023. HM Treasury has consulted on plans to streamline prospectus requirements, improve the quality of disclosure and empower the FCA to replace prospectus legislation with rules. The FCA will be consulting on these rules in late May/early June.
Read our briefing on the FCA’s blueprint for reform of the UK Listing Regime.
Prospectus review: FCA to be front and centre of new regime.
What is it?
HM Treasury consultation and call for evidence on the UK’s anti-money laundering regime.
What does it say?
The consultation suggests targeted changes e.g. excluding some payment service providers from AML rules and introducing the travel rule for crypto-assets. The call for evidence asks for views on the overall effectiveness of the UK AML regime.
What happens next?
Both papers invited feedback by 14 October 2021. In June 2022 HM Treasury responded to the call for evidence and published legislation implementing changes to the Money Laundering Regulations. These include a new change in control regime for registered cryptoasset firms, as well as the travel rule which will apply from 1 September 2023
