The government has set out more details on how it intends to repeal retained EU law relating to financial services and deliver a smarter regulatory framework for the UK. A package of reforms has been released to coincide with the Chancellor’s 2023 Mansion House speech. The Mansion House Reforms build on last year’s Edinburgh Reforms and last month’s enactment of the Financial Services and Markets Act 2023.
Delivery plan: what “significant progress” looks like
The latest collection of policy papers includes a plan for delivering a smarter financial services regulatory framework for the UK. This paper follows the December 2022 policy statement which set out the government’s policy approach for building a smarter regulatory framework. The latest plan describes how the government will deliver this approach in practice.
The government previously committed to making “significant progress” on tranches 1 and 2 of its implementation plan by the end of 2023. A table now shows what this means, specifying the actions that will be taken this year and what workstreams will be delivered in 2024 and beyond.
Before the end of 2023:
- statutory instruments will be laid to reform the Prospectus Regulation, Solvency II Directive, Securitisation Regulation and Data Reporting Services Regulations
- draft statutory instruments will be published proposing reform to the PRIIPs Regulation, the Short Selling Regulation and the Money Market Funds Regulations, with a view to laying the relevant legislation in 2024
- the ELTIF Regulation and consumer information requirements for payment accounts will be repealed without replacement
- a consultation will be published on the Taxonomy Regulation
- a first round of “targeted reforms” will be made to payments and e-money rules
- work will continue on Basel 3.1 implementation and the “strong and simple” framework for small banks and building societies.
In addition, almost 100 pieces of retained EU law which implemented EU obligations will be repealed on 29 August 2023. The government determines that these statutory instruments, which include dozens of EU exit regulations, are unnecessary because the effect of the amendments are preserved elsewhere.
The Edinburgh Reforms and Mansion House Reforms have largely focused on policy changes to the UK regime. The delivery plan emphasises that there will be some areas of retained EU law where regulatory obligations are moved from legislation to regulators’ rulebooks without exploring policy change. The government will announce which pieces of retained EU law will be considered for this “lift and shift” process when it sets out future tranches.
Changes coming to investment research
The government has accepted all the recommendations made in the Investment Research Review which was published on 10 July 2023. The FCA has committed to start immediate engagement with the market to inform any rule changes on removing the requirement to unbundle research costs by the first half of next year.
Read our update: UK Investment Research Review opens the way for potential removal of UK unbundling rules by H1 2024
More short selling reforms
In its response to its review of the Short Selling Regulation, the government says that it will introduce an aggregated net short position disclosure regime and increase the current disclosure threshold for net short position reporting to the FCA.
The government has also launched a new consultation which proposes deleting the aspects of the short selling regime which apply to sovereign debt and credit default swaps. The consultation closes on 7 August 2023.
Read our update: Government confirms relaxations of UK Short Selling Regulation regime for shares; signals intent to abolish regime for UK sovereign debt and CDS
PRIIPs to be replaced
In its response to its consultation on the PRIIPS regime, the government commits to removing all firm-facing retail disclosure requirements from legislation and empowering the FCA to deliver a new disclosure regime. This will include granting powers to the FCA to apply obligations to some unauthorised firms and overseas funds. UCITS vehicles will be brought into scope of the new retail disclosure regime after a transition period from the current disclosure requirements.
Payments regulation under review
In its response to its consultation, the government has confirmed that it will repeal the customer information requirements in the Payment Account Regulations 2015.
An independent review of the future of payments will explore how the UK can “remain at the forefront of payments technology”. A call for input has been opened until 1 September 2023.
Read our update: UK launches Future of Payments Review
New FMI sandbox
The government has launched a consultation on a digital securities sandbox. Under the DSS, financial market infrastructure can perform the activities of a central securities depository and operate a trading venue under a regulatory framework that is temporarily modified to accommodate digital asset technology.
The consultation closes on 21 August 2023.
A new public offer regime
First published as part of the Edinburgh Reforms, the government has revised its draft legislation for a new regime on public offers and admissions to trading. Technical comments on the near-final statutory instrument are invited by 21 August 2023.
Read our update: Treasury introduces “public offer platforms” as part of wider reforms of UK Prospectus regime
Pensions reform
Reform to the UK pensions market featured prominently in the Chancellor’s Mansion House speech. The government has published several papers, including responses to consultations on defined benefit schemes and extending collective defined contribution provision.
Read our update: Mansion House reforms: Implications for pension schemes
Background
The Mansion House Reforms represent the latest round of policy work as the government continues to shape the UK’s regulatory framework outside the EU.
The Financial Services and Markets Act 2023 provides the government with power to deliver the outcomes of a review into how the future regulatory framework for financial services should adapt following Brexit.
The government and regulators have also progressed several other policy workstreams in recent years. Explore our webpage on the future regulatory framework for a status update on these and links to further resources.
For further information, please contact:
Peter Bevan, Partner, Linklaters
peter.bevan@linklaters.com
