Asset Management

HM Treasury

The Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2022 - 14 June 2022

The Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2022 (the draft Regulations) have been laid before the Parliament and published, together with an explanatory memorandum. The draft Regulations follow HM Treasury’s March 2022 response to its September 2021 consultation on amending the definition of ‘investment firm’ in section 48D of the Banking Act 2009 to reflect the FCA’s Investment Firms Prudential Regime (IFPR), as well as HM Treasury’s call for evidence on the functioning of the retained EU law version of the Securitisation Regulation ((EU) 2017/2402).

Among other things, the Financial Services Act 2021 (the Act) introduced the framework for the IFPR and enabled the PRA to implemented Basel III standards through its rules. The draft Regulations make consequential amendments following the introduction of the IFPR and Basel III standards on 1 January 2022, including:

• repealing the Banking Act 2009 (Exclusion of Investment Firms of a Specified Description) Order 2014, as it is redundant following the removal of FCA-regulated investment firms from the UK resolution regime;
• making transitional provisions in respect of risk retention requirements for certain securitisations following the implementation of the IFPR. These relate to the retention of a material net economic interest in a securitisation by the originator, sponsor, or original lender to better align their interest with those of investors;
• ensuring that short-term liabilities owed to both PRA- and FCA-regulated investment firms with permission to underwrite or deal on own account will continue to be exempt from bail-in; and
• addressing deficiencies arising under the European Union (Withdrawal) Act 2018. This includes amending references in the Banking Act 2009.

It is not clear when the draft Regulations will be made or will come into force.

Draft Statutory Instrument: The Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2022 (2022 No. XXX)

Draft Explanatory Memorandum (2022 No. [XXXX])

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