Be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—
Prudential regulation of credit institutions and investment firms
Article 4(1) of the Capital Requirements Regulation (definitions) is amended in accordance with subsections (2) to (6).
In point (2) (definition of “investment firm”), for the words from “excluding” to the end substitute “ other than a credit institution ”.
In point (2A) (definition of “CRR firm”), in paragraph (a)(ii), for “an investment firm” substitute “ a designated investment firm ”.
After point (2A) insert—.
In point (3) (definition of “institution”), for “an investment firm” substitute “ a designated investment firm ”.
At the end insert—
In Schedule 1—
Part 1 contains consequential amendments of the Capital Requirements Regulation, and
Part 2 contains consequential amendments of the Capital Requirements (Country-by-Country Reporting) Regulations 2013 (S.I. 2013/3118).
In Schedule 2—
Part 1 inserts Part 9C of the Financial Services and Markets Act 2000 (prudential regulation of FCA investment firms),
Part 2 contains minor and consequential amendments of the Financial Services and Markets Act 2000, and
Part 3 contains transitional provision.
The Treasury may by regulations revoke provisions of the Capital Requirements Regulation relating to the matters listed in subsection (2).
The matters are—
deductions from Common Equity Tier 1 items;
the following aspects of the standardised approach to credit risk—
exposure value;
risk weights for exposures to institutions;
exposures to corporates;
exposures secured by mortgages on immovable property;
retail exposures;
subordinated debt and equity exposures;
the use of credit assessments;
exposures with particularly high risk;
exposures in the form of units or shares in collective investment undertakings;
classification of off-balance sheet items;
the following aspects of the internal ratings based approach to credit risk—
the advanced internal ratings based approach for asset classes that cannot be modelled in a robust and prudent manner;
input parameters;
the requirement to use the internal ratings based approach for all significant exposure classes;
the 1.06 scaling factor for estimating risk-weighted assets;
exposures in the form of units or shares in collective investment undertakings;
risk-weighted exposure amounts for equity exposures;
the treatment of expected loss amounts by exposure types;
the use of credit risk mitigation techniques for exposures risk-weighted under the standardised approach to credit risk or the internal ratings based approach to credit risk;
the following aspects of own funds requirements for counterparty credit risk—
requirements to use particular methods for calculating the exposure value;
the mark-to-market method;
the original exposure method;
the standardised method;
own funds requirements for exposures to a central counterparty;
own funds requirements for operational risk;
the following aspects of own funds requirements for market risk—
the approaches for calculating the own funds requirements for market risk;
the scope and structure of the alternative standardised approach;
foreign exchange risk factors in the alternative standardised approach;
the scope and structure of the alternative internal model approach, including the use of alternative internal models;
regulatory back-testing requirements and multiplication factors in the alternative internal model approach;
requirements relating to risk measurement in the alternative internal model approach;
own funds requirements relating to—
derogations for small trading book business;
the trading book;
own funds requirements for credit valuation adjustment risk;
large exposures;
liquidity requirements;
the leverage ratio;
reporting requirements;
disclosure requirements;
any other matter which is the subject of a CRR Basel standard.
The Treasury may by regulations revoke a provision of the Capital Requirements Regulation where—
the provision is connected with provision relating to a matter listed in subsection (2), and
the Treasury consider the revocation necessary or desirable in order to maintain or improve the coherence of the prudential regime comprised in, and in provision made under, the Capital Requirements Regulation and in general rules made by the Prudential Regulation Authority.
The Treasury may only make regulations under subsection (1) or (3) revoking a provision if they consider that—
the provision has been, or will be, adequately replaced by general rules made, or to be made, by the Prudential Regulation Authority, or
it is appropriate for the provision not to be replaced.
The Treasury may by regulations make consequential, supplementary, incidental, transitional, transitory and saving provision in connection with the revocation of provisions under subsection (1) or (3), including provision amending, repealing or revoking provisions of the Capital Requirements Regulation or another enactment.
Regulations under this section may make different provision for different purposes.
Regulations under this section are subject to the affirmative procedure.
Where the Treasury make regulations in reliance on subsection (2)(p), the Treasury must, when laying a draft of the regulations before Parliament, also lay before Parliament a statement explaining which provisions are made in reliance on that paragraph and identifying the relevant CRR Basel standard.
The reference in subsection (2)(p) to a matter that is the subject of a CRR Basel standard includes such a matter as it relates to any CRR firm (even where the standard in question does not apply to all CRR firms).
In this section—“CRR Basel standard” has the meaning given in section 4;“general rules” has the same meaning as in the Financial Services and Markets Act 2000 (see section 417 of that Act).
Terms used in this section and in the Capital Requirements Regulation have the same meaning in this section as they have in that Regulation (or any part of it).
For the purposes of section 3, “CRR Basel standard” means—subject to subsection (4).
a standard recommended in a document issued by the Basel Committee on Banking Supervision listed in subsection (2), or
a standard recommended in another document issued by that Committee where the recommended date for implementation of the standard falls on or before the date described in subsection (3),
The documents referred to in subsection (1)(a) are the documents entitled (and issued) as follows—
Capital requirements for banks' equity investments in funds (December 2013);
The standardised approach for measuring counterparty credit risk exposures (March 2014);
Capital requirements for bank exposures to central counterparties (April 2014);
Supervisory framework for measuring and controlling large exposures (April 2014);
Basel III: the net stable funding ratio (October 2014);
Revised Pillar 3 disclosure requirements (January 2015);
Pillar 3 disclosure requirements — consolidated and enhanced framework (March 2017);
Implementation of net stable funding ratio and treatment of derivative liabilities (October 2017);
Basel III: Finalising post-crisis reforms (December 2017);
Technical Amendment — Basel III: Treatment of extraordinary monetary policy operations in the Net Stable Funding Ratio (June 2018);
Pillar 3 disclosure requirements — regulatory treatment of accounting provisions (August 2018);
Pillar 3 disclosure requirements — updated framework (December 2018);
Minimum capital requirements for market risk (January 2019);
Targeted revisions to the credit valuation adjustment risk framework (July 2020).
The date referred to in subsection (1)(b) is whichever is the latest of the dates recommended by the Basel Committee on Banking Supervision in a document listed in subsection (2) for the implementation of a standard (or, where implementation is recommended to take place in phases, for the full implementation of a standard).
A recommended standard is not a CRR Basel standard to the extent that, immediately before the day on which this section comes into force, provision giving effect to the recommendation is included in an enactment.
References in this section to a document issued by the Basel Committee on Banking Supervision are to such a document as it has effect from time to time.
In Schedule 3—
Part 1 inserts Part 9D of the Financial Services and Markets Act 2000 (prudential regulation of credit institutions etc),
Part 2 amends the Prudential Regulation Authority's powers under Part 12B of that Act (approval of certain holding companies),
Part 3 contains minor and consequential amendments, and
Part 4 contains transitional provision.
In the Capital Requirements Regulation and in other enactments, except as otherwise provided—
pre-revocation references to the revoked provision are to be treated as references to the corresponding CRR rule, and
pre-revocation references to the Capital Requirements Regulation or the instrument, or to a division of that Regulation or instrument that included the revoked provision, are to be treated as including the corresponding CRR rule.
The Prudential Regulation Authority must—
prepare a document setting out whether and, if so, how CRR rules correspond to the revoked provision,
update the document from time to time, and
publish the document, and any update, in the manner best calculated to bring it to the attention of those likely to be affected by the Capital Requirements Regulation and CRR rules.
For the purposes of subsection (3), whether a CRR rule corresponds to a revoked provision is to be determined by reference to the document published under subsection (4), as updated from time to time.
In this section, references to instruments made under the Capital Requirements Regulation include EU tertiary legislation made under that Regulation which forms part of assimilated law.
In this section—“CRR rules” has the same meaning as in the Financial Services and Markets Act 2000 (see section 144A of that Act, inserted by Schedule 3 to this Act);“EU tertiary legislation” has the same meaning as in the European Union (Withdrawal) Act 2018 (see section 20 of that Act);“pre-revocation reference” means, in connection with the revocation of a provision described in subsection (2), a reference contained in an enactment immediately before the revocation (whether or not the reference is in force at that time).
The Treasury may by regulations amend the Credit Rating Agencies Regulation by making provision related to the issuing and use of credit ratings which it considers necessary or desirable having regard to a CRR Basel standard.
Regulations under this section may—
make different provision for different purposes, and
make consequential, supplemental, incidental, transitional, transitory and saving provision.
Regulations under this section are subject to the affirmative procedure.
The power under subsection (1) includes power to make provision in relation to any CRR firm (even where the CRR Basel standard to which the Treasury have regard does not apply to all CRR firms).
In this section—“CRR Basel standard” has the meaning given in section 4;“CRR firm” has the same meaning as in the Capital Requirements Regulation;“the Credit Rating Agencies Regulation” means Regulation (EC) No. 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies;“credit rating” has the same meaning as in the Credit Rating Agencies Regulation (see Article 3(1)(a) of that Regulation).
Schedule 4 contains amendments of the Capital Requirements Regulation.
Benchmarks
Article A20 of the Benchmarks Regulation (review of critical benchmarks) is amended in accordance with subsections (2) to (5).
In paragraph 2, for point (a) (but not the “and” at the end) substitute—.
In paragraph 2(b), for “point (a)(i) or (ii)” substitute “ point (a) ”.
In paragraph 3(b), for “point (a)(i) or (ii)” substitute “ point (a) ”.
In paragraph 6, for point (b) substitute—
In Article 20(1) of the Benchmarks Regulation (critical benchmarks: conditions and other matters)—
in the opening words of point (c), for “all” substitute “ both ”,
omit point (c)(i), and
after point (c) insert—
Article 21 of the Benchmarks Regulation (mandatory administration of a critical benchmark) is amended as follows.
In paragraph 3, for “five years” substitute “ 10 years ”.
After paragraph 3 insert—
In the Benchmarks Regulation, after Article 21 insert—
In Article 3(1) of the Benchmarks Regulation (definitions)—
after point (10) insert—, and
after point (17) insert—.
After Article 22 of the Benchmarks Regulation insert—
Paragraph 2 of Article 22A of the Benchmarks Regulation (inserted by this section) applies in the case of a benchmark which became a critical benchmark before the day on which this section comes into force, but as if it only required the administrator to submit an assessment at the end of each two year period described in that paragraph which ends after that day.
Article 23 of the Benchmarks Regulation (mandatory contribution to a critical benchmark) is amended as follows.
Omit paragraphs 1 to 4.
For paragraph 5 substitute—
In paragraph 6, for the opening words substitute “ If the FCA gives the administrator of a critical benchmark a notice under Article 21(3B)(a) or Article 22B(3)(a) (benchmark unrepresentative or representativeness at risk), it has the power to— ”.
In paragraph 6(a)—
after “supervised entities” insert “ and supervised third country entities ”, and
omit “from the date” to the end.
In paragraph 6(c), after “supervised entities” insert “ and supervised third country entities ”.
After paragraph 6 insert—
In paragraph 7—
after “supervised entities” insert “ and supervised third country entities ”, and
omit “supervised” (in the second place it occurs).
In paragraph 9(d), for “relevant supervised entities” substitute “ contributors mandated to contribute input data ”.
After paragraph 9 insert—
In paragraph 10—
after “supervised contributor” insert “ and supervised third country contributor ”, and
for “exceeding the maximum five year period laid down in the second subparagraph of paragraph 6” substitute “ extending beyond the end of the period of five years beginning with the day on which the administrator notified the FCA of its intention to cease providing the benchmark under Article 21(1) ”.
Omit paragraph 12.
In the Benchmarks Regulation, after Article 23 insert—
In the Benchmarks Regulation, after Article 23A (inserted by section 13) insert—
In the Benchmarks Regulation, after Article 23C (inserted by section 14) insert—
In the Benchmarks Regulation, after Annex 3 insert—
In the Benchmarks Regulation, after Article 23D (inserted by section 15) insert—
In the Benchmarks Regulation, after Article 23E (inserted by section 16) insert—
The FCA's duty under Article 23F(1) of the Benchmarks Regulation (inserted by subsection (1)) to prepare and publish a statement may be satisfied by things done by the FCA before subsection (1) comes into force (as well as by things done after that time).
In the Benchmarks Regulation, after Article 23F (inserted by section 17) insert—
In Article 49 of the Benchmarks Regulation (regulations made by the Treasury)—
after paragraph 2 insert—, and
in paragraph 3, at the beginning insert “ Subject to paragraph 2A, ”.
Article 28 of the Benchmarks Regulation (changes to and cessation of a benchmark) is amended as follows.
In paragraph 1—
omit “, together with the benchmark statement referred to in Article 27,”,
for “a procedure” substitute “ a robust procedure ”, and
omit “and shall be updated and published whenever a material change occurs”.
After paragraph 1 insert—
Article 51(5) of the Benchmarks Regulation (transitional provision for benchmarks with administrators located in a country outside the UK) is amended as follows.
In point (a), for “31 December 2022” substitute “ 31 December 2025 ”.
In point (b)—
for “1 January 2023” substitute “ 1 January 2026 ”, and
for “31 December 2022” substitute “ 31 December 2025 ”.
Schedule 5 contains minor and consequential amendments of the Benchmarks Regulation.
Access to financial services markets
Part 3 of the Financial Services and Markets Act 2000 (authorisation and exemption) is amended in accordance with subsections (2) to (4).
In section 31(1) (authorised persons), after paragraph (a) insert—.
After section 32 insert—
After section 36 insert—
Schedule 6 inserts Schedule 2A to the Financial Services and Markets Act 2000 (Gibraltar-based persons carrying on activities in the UK).
Schedule 7 inserts Schedule 2B to the Financial Services and Markets Act 2000 (UK-based persons carrying on activities in Gibraltar).
Schedule 8 contains minor and consequential amendments.
The Treasury may by regulations—
amend Part 7 of the Financial Services and Markets Act 2000 (control of business transfers) to make provision about the operation of that Part in relation to cases involving a Gibraltar-based person;
amend Part 18A of the Financial Services and Markets Act 2000 (suspension and removal of financial instruments from trading) to make provision about the operation of that Part in relation to cases involving a Gibraltar-based person;
make provision relating to a Gibraltar-based person equivalent to provision in an enactment in force immediately before IP completion day relating to an EEA firm of a kind mentioned in Schedule 3 to the Financial Services and Markets Act 2000, with such modifications as the Treasury consider appropriate.
The powers to make regulations under subsection (8) do not restrict the Treasury's power to make consequential provision under section 45.
In this section, “Gibraltar-based person” has the same meaning as in Schedule 2A to the Financial Services and Markets Act 2000 (inserted by Schedule 6 to this Act) (see paragraph 1 of that Schedule).
The Treasury may by regulations—
repeal or revoke relevant Gibraltar provision and make changes described in subsection (5),
make provision with the same effect as relevant Gibraltar provision repealed or revoked under paragraph (a),
amend relevant Gibraltar provision so as to restore any aspect of the effect the provision had immediately before IP completion day, and
In this section—
“Gibraltar provision” means a provision or set of provisions in an enactment so far as it relates to—
the carrying on of activities in the United Kingdom by persons based in Gibraltar,
the carrying on of activities in Gibraltar by persons based in the United Kingdom, or
interaction of any other kind between the United Kingdom and Gibraltar, whether relating to persons, activities, financial instruments, other property or other matters,
Gibraltar provision is “relevant” if—
it is a provision of, or applied or modified by, regulations listed in subsection (3),
it was inserted, amended or otherwise modified by regulations listed in subsection (4),
it is, or is the subject of, saving provision included in regulations listed in subsection (4), or
in the case of a set of provisions, it includes provision falling within sub-paragraph (ii) or (iii), and
Gibraltar provision is also “relevant” if it was made by regulations under subsection (1)(b), (c) or (d) or, in the case of a set of provisions, it includes provision made by such regulations.
The regulations referred to in subsection (2)(b)(i) are the following, as amended from time to time—
the Electronic Money Regulations 2011 (S.I. 2011/99);
the Payment Services Regulations 2017 (S.I. 2017/752);
the Data Reporting Services Regulations 2017 (S.I. 2017/699).
The regulations referred to in subsection (2)(b)(ii) and (iii) are the following, as amended from time to time—
regulation 3 of the Building Societies Legislation (Amendment) (EU Exit) Regulations 2018 (S.I. 2018/1187);
Parts 2 and 3 of the Credit Transfers and Direct Debits in Euro (Amendment) (EU Exit) Regulations 2018 (S.I. 2018/1199);
Part 2 of the Greenhouse Gas Emissions Trading Scheme (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/107);
Chapters 1 and 2 of Part 2 of the Alternative Investment Fund Managers (Amendment etc) (EU Exit) Regulations 2019 (S.I. 2019/328);
the Gibraltar (Miscellaneous Amendments) (EU Exit) Regulations 2019 (S.I. 2019/680).
The changes referred to in subsection (1)(a) are changes that the Treasury consider appropriate to secure that, after the repeal or revocation of the relevant Gibraltar provision, the same provision is made in connection with Gibraltar as is made in connection with most or all other countries or territories outside the United Kingdom.
The Treasury may not make regulations under subsection (1)(b), (c) or (d) unless they are satisfied that doing so is compatible with each of the following objectives—
to protect and enhance the soundness, stability and resilience of the UK financial system;
to protect and enhance public confidence in the UK financial system;
to prevent the use of the UK financial system for a purpose connected with financial crime;
to ensure that, in the United Kingdom, financial markets and significant markets for financial services function well;
to protect consumers;
to protect the operation of the Financial Services Compensation Scheme;
to protect public funds;
to maintain and improve relations between the United Kingdom and other countries and territories with significant financial markets or significant markets for financial services.
Before making regulations under subsection (1)(d), the Treasury must consult—
the government of Gibraltar,
the Financial Conduct Authority, and
the Prudential Regulation Authority.
The powers under subsection (1)(b), (c) and (d) include—
power to make such modifications as the Treasury consider appropriate having regard to changes in the law of any part of the United Kingdom since the relevant regulations listed in subsection (3) or (4) were made, and
power to restate relevant Gibraltar provision in a clearer or more accessible way.
Where provision saving or modifying a provision is repealed or revoked under subsection (1)(a), the power under subsection (1)(b) includes power to make provision with the same effect as the provision that was the subject of the saving or modification, read with the saving or modification.
The power under subsection (1)(d) includes power to make provision applying provisions of section 32A of, or Schedule 2A or 2B to, the Financial Services and Markets Act 2000, with or without modifications.
Regulations under this section may—
make different provision for different purposes;
confer functions on a person, including functions involving the exercise of a discretion;
amend, revoke, repeal or otherwise modify an enactment;
make consequential, incidental, supplementary, transitional, transitory or saving provision.
Regulations under this section are subject to the affirmative procedure.
For the purposes of this section, provision that is saved or modified by regulations listed in subsection (3) or (4) is Gibraltar provision if, when read with the saving or modification, it relates to a matter described in subsection (2)(a).
In this section—“consumers” has the meaning given in section 1G of the Financial Services and Markets Act 2000;“financial crime” has the meaning given in section 1H of the Financial Services and Markets Act 2000;“public funds” means the Consolidated Fund and any other account or source of money which cannot be drawn or spent other than by, or with the authority of, the Treasury;“the UK financial system” has the same meaning as in the Financial Services and Markets Act 2000 (see section 1I of that Act).
In Part 17 of the Financial Services and Markets Act 2000 (collective investment schemes), in section 237(3)—
in the definition of “a recognised scheme”, after “means” insert “ a section 271A scheme or ”, and
after that definition insert—.
In Schedule 9—
Part 1 inserts sections 271A to 271S (collective investment schemes authorised in approved countries or territories) in Chapter 5 of Part 17 of the Financial Services and Markets Act 2000 (recognised overseas schemes), and
Part 2 contains minor and consequential amendments.
The Financial Services and Markets Act 2000 is amended as follows.
Chapter 5 of Part 17 (recognised overseas schemes) is amended in accordance with subsections (3) to (5).
In section 272 (individually recognised overseas schemes)—
in subsection (1)—
in paragraph (a) omit the “and” at the end,
before paragraph (d) insert—, and
in paragraph (d), for “the following provisions of this section” substitute “ subsections (2) to (15) ”,
after that subsection insert—, and
in subsection (5)(b) omit “, or could be,”.
In section 277 (requirement to notify the FCA of proposed alteration to recognised scheme)—
in subsection (1), at the end insert “ which, if made, would be a material alteration ”,
in subsection (3) omit “At least one month”,
after that subsection insert—, and
after subsection (5) insert—
After section 282 insert—
In section 237(3), in the definition of “a recognised scheme”, at the end insert “ (and see also section 282C) ”.
In section 392 (application of third party rights to notices)—
in paragraph (a), after “280(1),” insert “ 282B(3), ”, and
in paragraph (b), after “280(2),” insert “ 282B(4), ”.
In section 429(2) (regulations subject to affirmative procedure), before “284A” insert “ 282C, ”.
Regulation (EU) 2017/1131 of the European Parliament and of the Council of 14 June 2017 on money market funds is amended as follows.
In Article 4 (authorisation of MMFs)—
in paragraph 1, after point (a) insert—, and
after paragraph 1 insert—
After Article 4 insert—
In Article 6(1) (use of designation as MMF), in each subparagraph, after point (a) insert—.
Schedule 10 contains amendments of the Markets in Financial Instruments Regulation relating to the provision of investment services, and the performance of investment activities, in the United Kingdom by third country firms.
In this section and Schedule 10, “the Markets in Financial Instruments Regulation” means Regulation (EU) No. 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments.
Variation or cancellation of permission to carry on regulated activity
Schedule 11 amends Part 4A of the Financial Services and Markets Act 2000 (permission to carry on regulated activities) and other provisions in that Act for connected purposes.
Rules about level of care provided by authorised persons
The Financial Conduct Authority must carry out a public consultation about whether it should make general rules providing that authorised persons owe a duty of care to consumers.
The consultation must include consultation about—
whether the Financial Conduct Authority should make other provision in general rules about the level of care that must be provided to consumers by authorised persons, either instead of or in addition to a duty of care,
whether a duty of care should be owed, or other provision should apply, to all consumers or to particular classes of consumer, and
the extent to which a duty of care, or other provision, would advance the Financial Conduct Authority's consumer protection objective (see section 1C of the Financial Services and Markets Act 2000).
The Financial Conduct Authority—
must carry out the consultation, and publish its analysis of the responses, before 1 January 2022, and
must, before 1 August 2022, make such general rules about the level of care that must be provided to consumers, or particular classes of consumer, by authorised persons as it considers appropriate, having regard to that analysis.
The duties to consult under this section may be satisfied by consultation carried out after 1 January 2021 but before this section comes into force (as well as by consultation carried out after this section comes into force).
In this section—“authorised person” has the same meaning as in the Financial Services and Markets Act 2000 (see section 31 of that Act);“consumer” has the meaning given in section 1G of that Act;“general rules” means rules made under section 137A of that Act.
Insider dealing and money laundering etc
Regulation (EU) No. 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse is amended as follows.
In Article 18 (insider lists)—
in paragraph 1, in the opening words—
for “or any person” substitute “ , and any person ”, and
after “shall” insert “ each ”,
in paragraph 2, in the first subparagraph—
for “or any person” substitute “ , and any person ”,
after “shall” insert “ each ”, and
for “the insider list” substitute “ their insider list ”,
in paragraph 2, for the second subparagraph substitute—,
in paragraph 4—
for “or any person” substitute “ , and any person ”, and
for “shall update the” substitute “ , shall each update their ”, and
in paragraph 5—
for “or any person” substitute “ , and any person ”, and
for “shall retain the” substitute “ , shall each retain their ”.
In Article 19 (managers' transactions)—
in paragraph 1, in the second subparagraph, for “business days” substitute “ working days ”,
in paragraph 3, in the first subparagraph, for the words from the beginning to “transaction” substitute “ The issuer or emission allowance market participant must make public the information contained in a notification referred to in paragraph 1 within two working days of receipt of such a notification ”, and
at the end insert—
In section 61(1)(b) of the Criminal Justice Act 1993 (penalty for conviction on indictment for insider dealing), for “seven years” substitute “ ten years ”.
In section 92(1)(b) of the Financial Services Act 2012 (penalty for conviction on indictment for financial services offences), for “7 years” substitute “ 10 years ”.
The amendment made by subsection (1) or (2) does not apply in relation to offences committed before the subsection comes into force.
Where an offence is found to have been committed over a period of 2 or more days, or at some time during a period of 2 or more days, it must be taken for the purposes of subsection (3) to have been committed on the first of those days.
Part 7 of the Proceeds of Crime Act 2002 (money laundering) is amended in accordance with subsections (2) to (6).
In section 327(2C) (conversion or transfer of criminal property: exceptions), after “deposit-taking body” insert “ , electronic money institution or payment institution ”.
In section 328(5) (arrangements: exceptions), after “deposit-taking body” insert “ , electronic money institution or payment institution ”.
In section 329(2C) (acquisition, use and possession: exceptions), after “deposit-taking body” insert “ , electronic money institution or payment institution ”.
In section 339A (threshold amounts)—
in subsection (2), after “deposit-taking body” insert “ , electronic money institution or payment institution ”,
in subsection (3), in the opening words, after “deposit-taking body” insert “ , electronic money institution or payment institution ”,
in subsection (3)(a), for “deposit-taking body's” substitute “body's or institution's”,
in subsection (3)(b), for “deposit-taking body” substitute “ body or institution ”,
in subsection (4), after “deposit-taking body” insert “ , electronic money institution or payment institution ”, and
in subsection (8)—
after “deposit-taking body” insert “ , electronic money institution or payment institution ”, and
after “the body” insert “ or institution ”.
In section 340 (interpretation)—
in subsection (14)—
omit “or” at the end of paragraph (a), and
after paragraph (b) insert,
after subsection (14) insert—, and
at the end insert—
In section 459 of the Proceeds of Crime Act 2002 (orders and regulations)—
in subsection (4), before paragraph (aa), insert—,
before subsection (6A) insert—, and
in subsection (6A), before “would” insert “ or of regulations under section 340(14)(c) or (14A)(b) ”.
Schedule 12 amends provisions in the Anti-terrorism, Crime and Security Act 2001 and the Proceeds of Crime Act 2002 about the forfeiture of money so that they apply to money held in accounts maintained with electronic money institutions and payment institutions.
Subject to subsection (3), the amendments made by that Schedule are to be treated as having come into force at the same time as the provisions they amend.
Subsection (2) does not apply to the amendments of Part 5 of the Proceeds of Crime Act 2002 as they extend to Northern Ireland.
Regulations made, before this section comes into force, under—apply (and are to be treated as having always applied) for the purposes of notices relating to money held in accounts maintained with electronic money institutions and payment institutions, as well as for the purposes of notices relating to money held in accounts maintained with banks and building societies.
paragraph 10X of Schedule 1 to the Anti-Terrorism, Crime and Security Act 2001, or
section 303Z10 of the Proceeds of Crime Act 2002,
In paragraph 22(2) (extra-territorial application of section 49 regulations: meaning of “United Kingdom person”)—
in paragraph (b), omit the “or” at the end, and
after paragraph (c) insert
After paragraph 22 insert—
Debt respite scheme
In section 6(2)(c) of the Financial Guidance and Claims Act 2018 (debt respite scheme), omit “and their creditors”.
In section 7 of that Act (debt respite scheme: regulations), after subsection (4) insert—
In section 7(5) of that Act, after paragraph (b) insert—.
The amendment in subsection (1) does not have the effect that further advice on the establishment of a debt respite scheme has to be sought, provided or published under section 6(1), (4) or (5) of the Financial Guidance and Claims Act 2018 (such advice having been sought, provided and published in accordance with those provisions before the day on which this Act is passed).
Help to save
In Schedule 2 to the Savings (Government Contributions) Act 2017 (Help-to-Save accounts), after paragraph 13 insert—
Miscellaneous
This section applies on or at any time after the making of an order under section 22 of the Financial Services and Markets Act 2000, after this section comes into force, which has the effect that a relevant credit activity becomes a regulated activity for the purposes of that Act.
Section 107(6) of the Financial Services Act 2012 (power to make provision about the application of the Consumer Credit Act 1974) has effect as if—
the reference to an order of the kind mentioned in subsection (1) of that section included an order of the kind mentioned in subsection (1) of this section, and
the references to a transferred activity included a relevant credit activity which is the subject of an order of the kind mentioned in subsection (1) of this section.
“Relevant credit activity” means the activity of—so far as the activity is not a transferred activity (as defined in section 107(1) of the Financial Services Act 2012).
entering into an agreement described in article 60F(2) or (3) of the Regulated Activities Order (certain borrower-lender-supplier agreements for fixed-sum credit or running-account credit) as lender, or
exercising, or having the right to exercise, the lender's rights and duties under such an agreement,
“The Regulated Activities Order” means the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544) as it has effect on the passing of this Act.
In this section “the PRIIPs Regulation” means Regulation (EU) No. 1286/2014 of the European Parliament and of the Council of 26 November 2014 on key information documents for packaged retail and insurance-based investment products (PRIIPs).
After Article 4 of the PRIIPs Regulation insert—
Any requirement that arises by virtue of Article 4A(3)(d) of the PRIIPs Regulation, as inserted by subsection (2), may be satisfied by things done before that subsection comes into force (as well as by things done after that time).
In paragraph 3 of Article 8 of the PRIIPs Regulation (information to be contained in key information document), in point (d)(iii), for “performance scenarios and the assumptions made to produce them” substitute “ information on performance ”.
The Treasury may by regulations substitute a later date for the date that is for the time being mentioned in Article 32(1) of the PRIIPs Regulation (exemption of UCITS).
The date as substituted under subsection (5) must be no later than 31 December 2026.
Regulations under subsection (5) are subject to the negative procedure.
In Article 28 of Regulation (EU) No. 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (data protection), omit “Personal data is to be retained for a maximum period of five years.”
Regulation (EU) No. 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (the “European Market Infrastructure Regulation”) is amended as follows.
In Article 4 (clearing obligation)—
after paragraph 3 insert—, and
after paragraph 4 insert—
In Article 78 (general requirements), at the end insert—
After Article 84a insert—
The requirements of section 138I of the Financial Services and Markets Act 2000, in so far as they apply in connection with rules made under Article 4(4A) or 78(10) of the European Market Infrastructure Regulation, may be satisfied by things done before the relevant provision of this section comes into force (as well as by things done after that time).
The Financial Collateral Arrangements (No. 2) Regulations 2003 (S.I. 2003/3226) as originally made, and all amendments made to them, have effect, and are to be treated as having had effect, despite any lack of power to make the regulations and amendments.
Accordingly, the validity of anything done under or in reliance on those regulations (whether as originally made or as amended) is to be treated as unaffected by any such lack of power.
The Banking Act 2009 is amended in accordance with subsections (4) to (6).
In section 255 (regulations about financial collateral arrangements)—
in subsection (3)(b) omit “or purported to be done”,
omit subsection (5), and
after that subsection insert—
Omit section 256 (procedure for making regulations under section 255).
In the table in section 259(3) (procedure applying to statutory instruments), in the entry for section 255, for “affirmative resolution” substitute “ draft affirmative resolution ”.
Schedule 1ZA to the Financial Services and Markets Act 2000 (Financial Conduct Authority) is amended as follows.
In paragraph 2A—
after sub-paragraph (1) insert—, and
in sub-paragraph (2), for “Sub-paragraph (1) does” substitute “ Sub-paragraphs (1) and (1A) do ”.
After paragraph 2A insert—
The Financial Services and Markets Act 2000 is amended as follows.
In section 425C (“qualifying provision”)—
the existing text becomes subsection (1),
after paragraph (b) of that subsection insert—,
in paragraph (c) of that subsection omit “(within the meaning of the Interpretation Act 1978)”, and
after that subsection insert—
In paragraph 8(3) of Schedule 1ZA (Financial Conduct Authority's arrangements for discharging functions: legislative functions), in paragraph (a), after “rules” insert “ under this Act or under retained direct EU legislation ”.
In Part 2 of Schedule 1 to the Payment Services Regulations (S.I. 2017/752) (activities which do not constitute payment services), after paragraph 2 insert—
General
The Treasury may by regulations make provision that is consequential on any provision made by this Act.
Regulations under this section may—
make different provision for different purposes;
include transitional, transitory or saving provision;
amend, repeal, revoke or otherwise modify an enactment.
Regulations under this section are subject to the affirmative procedure if they amend, repeal or revoke any provision of—
an Act,
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
a Measure or Act of Senedd Cymru,
an Act of the Scottish Parliament, or
Northern Ireland legislation.
Regulations under this section to which subsection (4) does not apply are subject to the negative procedure.
Regulations under this Act are to be made by statutory instrument.
Where regulations under this Act are subject to “the negative procedure”, the statutory instrument containing the regulations is subject to annulment in pursuance of a resolution of either House of Parliament.
Where regulations under this Act are subject to “the affirmative procedure”, the regulations may not be made unless a draft of the statutory instrument containing them has been laid before and approved by a resolution of each House of Parliament.
Any provision that may be included in regulations under this Act subject to the negative procedure may be made by regulations subject to the affirmative procedure.
In this Act—“the Benchmarks Regulation” means Regulation (EU) 2016/1011 of the European Parliament and of the Council of 8 June 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds;“the Capital Requirements Regulation” means Regulation (EU) No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms;“enactment” includes—assimilated direct legislation, an enactment comprised in subordinate legislation, an enactment comprised in, or in an instrument made under, a Measure or Act of Senedd Cymru, an enactment comprised in, or in an instrument made under, an Act of the Scottish Parliament, and an enactment comprised in, or in an instrument made under, Northern Ireland legislation;“subordinate legislation” has the same meaning as in the Interpretation Act 1978 (see section 21 of that Act).
This Act extends to England and Wales, Scotland and Northern Ireland, subject to subsection (2).
In section 35—
subsections (1), (2) and (4) extend to England and Wales only, and
subsection (3) extends to England and Wales and Northern Ireland only.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The power under section 430(3) of the Financial Services and Markets Act 2000 may be exercised so as to extend to any of the Channel Islands or the Isle of Man any amendment or repeal made by or under this Act of any part of that Act (with or without modifications).
This section and the following provisions come into force on the day on which this Act is passed—
section 36,
section 41,
section 45,
section 46,
section 47,
section 48, and
section 50.
The following provisions come into force at the end of the period of two months beginning with the day on which this Act is passed—
section 30,
section 32,
section 35,
section 42, and
section 44.
Paragraphs 10 to 21 of Schedule 12 as they extend to Northern Ireland come into force on such day as the Treasury or the Secretary of State may by regulations appoint.
Section 34 comes into force on such day as the Treasury or the Secretary of State may by regulations appoint.
The other provisions of this Act come into force on such day as the Treasury may by regulations appoint.
Regulations under subsection (3), (4) or (5) may appoint different days for different purposes.
The Treasury or the Secretary of State may by regulations make transitional, transitory or saving provision in connection with the coming into force of a provision of this Act.
Regulations under subsection (7) may make different provision for different purposes.
This Act may be cited as the Financial Services Act 2021.
Exclusion of certain investment firms from the Capital Requirements Regulation: consequential amendments
Amendments of the Capital Requirements Regulation
The Capital Requirements Regulation is amended as follows.
Article 4(1) (definitions) is amended as follows.
Omit point (4) (definition of “local firm”).
After point (22) insert—.
In point (26) (definition of “financial institution”)—
after “including” insert “ an investment firm, ”, and
after “a mixed financial holding company,” insert “ an investment holding company, ”.
For point (29a) substitute—.
For point (51) substitute—.
In point (60) (definition of “cash assimilated instrument”), after “institution” (in each place) insert “ or investment firm ”.
Article 4A (definitions: regulators' rules) is amended as follows.
In paragraph 1(b) (references to FCA sourcebook), for “as the sourcebook has effect on IP completion day” substitute “ as amended from time to time ”.
At the end insert—
For Article 4B substitute—
Before Article 11 (and the Section and Chapter headings before it) insert—
Omit Article 15 (derogation from the application of own funds requirements on a consolidated basis for groups of investment firms).
Omit Article 16 (derogation from the application of the leverage ratio requirements on a consolidated basis for groups of investment firms).
Omit Article 17 (supervision of investment firms waived from the application of own funds requirements on a consolidated basis).
In Article 47c(5) (deduction for non-performing exposures), omit “and the FCA”.
In Article 49(6) (requirement for deduction where consolidation, supplementary supervision or institutional protection schemes are applied) omit “and Annex 1 of Chapter 3 of the FCA General Prudential sourcebook”.
Article 81(1)(a) (minority interests that qualify for inclusion in consolidated Common Equity Tier 1 capital) is amended as follows.
After point (ii) insert—.
In point (iii)—
after “subject to prudential requirements” insert “ which are ”,
for “where” substitute “ which ”, and
omit “that those prudential requirements”.
Article 82(a) (Qualifying Additional Tier 1, Tier 1, Tier 2 capital and qualifying own funds) is amended as follows.
After point (ii) insert—.
In point (iii)—
after “subject to prudential requirements” insert “ which are ”,
for “where” substitute “ which ”, and
omit “that those prudential requirements”.
Article 84 (minority interests included in consolidated Common Equity Tier 1 capital) is amended as follows.
In paragraph 1(a), for point (i) substitute—.
In paragraph 3—
for “a competent authority” substitute “ the PRA ”, and
for “interest” substitute “ interests ”.
After paragraph 3 insert—
Article 85 (qualifying Tier 1 instruments included in consolidated Tier 1 capital) is amended as follows.
In paragraph 1(a), for point (i) substitute—.
In paragraph 3, for “a competent authority” substitute “ the PRA ”.
After paragraph 3 insert—
Article 87 (qualifying own funds included in consolidated own funds) is amended as follows.
In paragraph 1(a), for point (i) substitute—.
In paragraph 3, for “a competent authority” substitute “ the PRA ”.
After paragraph 3 insert—
In Article 93 (initial capital requirement on going concern)—
omit paragraph 3,
in paragraphs 4 and 5, omit “or 3”, and
in paragraph 6, for “2 to 5” substitute “ 2, 4 and 5 ”.
Omit Article 95 (own funds requirements for investment firms with limited authorisation to provide investment services).
Omit Article 96 (own funds requirements for IFPRU 730k firms).
Omit Article 97 (own funds based on fixed overheads).
Omit Article 98 (own funds for investment firms on a consolidated basis).
In Article 100 (additional reporting requirements), in the second subparagraph, for “The FCA or the PRA (as the case may be)” substitute “ The PRA ”.
In Article 115(2) (exposures to regional governments or local authorities), in the second subparagraph, omit “and FCA”.
In Article 119 (exposures to institutions), after paragraph 5 insert—
Article 136 (mapping of ECAI's credit assessments) is amended as follows.
In paragraph 1, for “The FCA and the PRA may each” substitute “ The PRA may ”.
In paragraph 2—
for “the FCA and the PRA”, in each place it occurs, substitute “ the PRA ”, and
in point (e), for “have” substitute “ has ”.
In paragraph 3, for “The FCA and the PRA may each” substitute “ The PRA may ”.
In Article 162(3) (maturity), in the second subparagraph, in point (a), after “institutions” insert “ or investment firms ”.
Article 197 (eligibility of collateral under all approaches and methods) is amended as follows.
In paragraph 1(c), after “issued by institutions” insert “ or investment firms ”.
In paragraph 4, after “other institutions” insert “ or investment firms ”.
In Article 199(8) (additional eligibility for collateral under the IRB Approach), omit “and the FCA”.
In Article 200 (other funded credit protection), for point (c) substitute—
In Article 202 (eligibility of protection providers under the IRB Approach which qualify for Article 153(3) treatment), after “institutions,” insert “ investment firms, ”.
In Article 224(6) (supervisory volatility adjustment under Financial Collateral Comprehensive Method), after “institutions”, in the first place it occurs, insert “ or investment firms ”.
In Article 227(3) (conditions for applying 0% volatility adjustment under Financial Collateral Comprehensive Method), after point (b) insert—.
In Article 243(1) (criteria for STS securitisations qualifying for differentiated capital treatment), in the second subparagraph, after “an institution,” insert “ an investment firm, ”.
Article 270e (securitisation mapping) is amended as follows.
For “The FCA and the PRA may each” substitute “ The PRA may ”.
For the words from “For” to “shall” substitute “ For the purposes of this Article, the PRA shall ”.
In Article 290(3) (stress testing), for the words from “the relevant regulatory rules” to the end substitute “ rule 6.1 of the Internal Capital Adequacy Part of the PRA rulebook ”.
Article 304(5) (treatment of clearing members' exposure to clients) is amended as follows.
In the first subparagraph, for “The FCA and the PRA may each” substitute “ The PRA may ”.
In the second subparagraph, for “the FCA or the PRA (as the case may be)” substitute “ the PRA ”.
Article 325u(5) (own funds requirements for residual risks) is amended as follows.
In the first subparagraph, for “The FCA and PRA may each” substitute “ The PRA may ”.
In the second subparagraph, for “the FCA and PRA” substitute “ the PRA ”.
Article 325az (alternative internal model approach and permission to use alternative internal models) is amended as follows.
In paragraph 8, for “The FCA and PRA may each” substitute “ The PRA may ”.
In paragraph 9—
for “The FCA and the PRA may each” substitute “ The PRA may ”, and
for “they” substitute “ it ”.
Article 325bk(3) (calculation of stress scenario risk measure) is amended as follows.
In the first subparagraph, for “The FCA and PRA may each” substitute “ The PRA may ”.
In the second subparagraph, for “the FCA and PRA” substitute “ the PRA ”.
In Article 382(4) (scope of own funds requirements for CVA risk), in point (b), for “institutions” substitute “ entities ”.
Article 441(2) (indicators of global systemic importance) is amended as follows.
For “The FCA and the PRA may each” substitute “ The PRA may ”.
For “the FCA or the PRA (as the case may be)” substitute “ the PRA ”.
In Article 450(1)(d) (remuneration policy) omit “19A.3.44R to 44DR and”.
In Article 456(1) (regulations modifying this Regulation) omit points (f) and (g).
Article 464B (power to make technical standards) is amended as follows.
Omit paragraph 1.
In paragraph 2, for “the PRA and FCA may both” substitute “ the PRA may ”.
In paragraph 3 omit “alone”.
In Article 522(1)(b) (savings provisions: pre-exit decisions)—
omit “and FCA”, and
omit the words from “in relation to” to “other person”.
In Annex 1 (classification of off-balance sheet items), in point 1(d), at the end insert “ or an investment firm ”.
Annex 3 (items subject to supplementary reporting of liquid assets) is amended as follows.
In point 3(b), for “of an institution or any of its affiliated entities” substitute “ of, or of an affiliated entity of, an institution or an investment firm ”.
In point 5(b), for “of an institution or any of its affiliated entities” substitute “ of, or of an affiliated entity of, an institution or an investment firm ”.
In point 6(a), for “on an SSPE, an institution or any of its affiliated entities” substitute “ on, or on an affiliated entity of, an SSPE, an institution or an investment firm ”.
In point 7, for “on an SSPE, an institution or any of its affiliated entities” substitute “ on, or on an affiliated entity of, an SSPE, an institution or an investment firm ”.
In point 11, for “by an institution or any of its affiliates” substitute “ by, or by an affiliate of, an institution or an investment firm ”.
In the following provisions, for “FCA and PRA may each” or “FCA and the PRA may each” (as appropriate) substitute “ PRA may ”Article 4(4); Article 18(9); Article 26(4); Article 27(2); Article 28(5); Article 29(6); Article 32(2); Article 33(4); Article 36(2), (3) and (4); Article 41(2); Article 52(2); Article 73(7); Article 76(4); Article 78(5); Article 79(2); Article 83(2); Article 84(4); Article 99(5), first subparagraph; Article 99(6), second subparagraph; Article 101(4); Article 105(14); Article 110(4); Article 132a(4); Article 143(5); Article 144(2); Article 148(6); Article 150(3); Article 152(5); Article 153(9); Article 164(8); Article 173(3); Article 178(6); Article 180(3); Article 181(3); Article 182(4); Article 183(6); Article 194(10); Article 197(8); Article 221(9); Article 248(1), second subparagraph; Article 255(9); Article 270a(2); Article 277(5); Article 279a(3); Article 312(4); Article 314(5); Article 316(3); Article 318(3); Article 325(9); Article 325w(8); Article 325ap(3); Article 325bd(7); Article 325be(3); Article 325bf(9); Article 325bg(4); Article 325bp(12); Article 329(3); Article 341(3); Article 344(1); Article 352(6); Article 354(3); Article 358(4), first subparagraph; Article 363(4); Article 382(5); Article 383(7); Article 430b(6); Article 434a, first subparagraph; Article 437(2); Article 440(2); Article 443; Article 451(2); Article 487(3); Article 492(5).
Amendments of the Capital Requirements (Country-by-Country Reporting) Regulations 2013
The Capital Requirements (Country-by-Country Reporting) Regulations 2013 (S.I. 2013/3118) are amended as follows.
Regulation 1(2) (interpretation) is amended as follows.
For the definition of “capital requirements regulation” substitute—.
After that definition insert—.
After the definition of “period of account” insert—.
In regulation 1, after paragraph (2) insert—
In regulation 1(3) (interpretation of references to EU legislation), for “any EU regulation,” substitute “ any EU regulation other than the capital requirements regulation or to any ”.
Regulation 2 (ongoing reporting obligation) is amended as follows.
In paragraph (1), after “Institutions” insert “ and relevant FCA investment firms ”.
In paragraph (2), after “institution” insert “ or relevant FCA investment firm ”.
In paragraph (3), for “institution's period of account” substitute “ period of account for the institution or relevant FCA investment firm ”.
In paragraph (4)—
in the opening words, after “institution” insert “ or relevant FCA investment firm ”, and
in sub-paragraph (a), after “institution” insert “ or relevant FCA investment firm ”.
In paragraph (8), after “institution” insert “ or relevant FCA investment firm ”.
In regulation 3(1) (interim reporting obligation), after “Institutions” insert “ and relevant FCA investment firms ”.
Regulation 4 (group disclosure) is amended as follows.
In paragraph (1), after “institution” insert “ or relevant FCA investment firm ”.
In paragraph (2), after “institution” insert “ or relevant FCA investment firm ”.
Regulation 5 (prior disclosure: prevention of duplication) is amended as follows.
In paragraph (3)—
after “an institution” insert “ or relevant FCA investment firm ”, and
after “the institution” (in both places) insert “ or firm ”.
In paragraph (4)—
after “an institution” insert “ or relevant FCA investment firm ”, and
after “the institution” (in both places) insert “ or firm ”.
In regulation 6(2) (enforcement)—
in sub-paragraph (a) omit “which is a PRA-authorised person within the meaning of section 2B(5) of the 2000 Act”, and
in sub-paragraph (b), for “any other institution” substitute “ a relevant FCA investment firm ”.
Prudential regulation of FCA investment firms
New Part 9C of the Financial Services and Markets Act 2000
In the Financial Services and Markets Act 2000, after Part 9B insert—
Minor and consequential amendments
The Financial Services and Markets Act 2000 is amended as follows.
In section 133(7A) (proceedings before the Tribunal: meaning of “disciplinary reference”), after paragraph (ia) insert—.
In section 137A (the FCA's general rules), at the end insert—
In section 165(7) (regulators' power to require information), after paragraph (d) insert—.
Section 166 (regulators' power to require reports by skilled persons) is amended as follows.
In subsection (10), after “subsection (11)” insert “ or (12) ”.
After subsection (11) insert—
Section 167 (regulators' power to appoint investigators) is amended as follows.
In subsection (1)—
in paragraph (a), for “a recognised investment exchange or an authorised person or of” substitute “ a person to whom subsection (1A) applies or ”, and
in paragraph (c), for “a recognised investment exchange or an authorised person” substitute “ a person to whom subsection (1A) applies ”.
After subsection (1) insert—
For subsection (4) substitute—
In subsection (5A), at the end insert—
In section 168(4), after paragraph (i) insert—.
Section 171 (powers of person appointed under section 167) is amended as follows.
In subsection (1), for the words before paragraph (a) substitute “ An investigator may require a person to whom subsection (1A) applies— ”.
After subsection (1) insert—
Section 176 (entry of premises under warrant) is amended as follows.
In subsection (3)(a), for “an authorised person or an appointed representative” substitute “ a person to whom subsection (3A) applies ”.
After subsection (3) insert—
After section 177 insert—
In section 347(1)(g) (record of authorised persons etc), after “order” insert “ or Part 9C prohibition order ”.
In section 391(1ZB) (publication of warning notices), after paragraph (ia) insert—.
In section 392 (application of third party rights to notices)—
in paragraph (a), after “142T(1),” insert “ 143N(1), 143T(1), 143U(2), 143X(1), ”, and
in paragraph (b), after “142T(4),” insert “ 143N(2), 143T(3), 143U(2), 143X(5), ”.
In section 395(13) (meaning of supervisory notice), after paragraph (bba) insert—.
Section 417(1) (definitions) is amended as follows.
At the appropriate place insert—.
In the definition of “prohibition order”, after “order”” insert “ (except in the expression “Part 9C prohibition order”) ”.
In section 424A(1) (investment firm), after “this Act” insert “ (except as otherwise provided) ”.
Section 429 (parliamentary control of statutory instruments) is amended as follows.
In subsection (2), after “142W,” insert “ 143C(2), 143D(2), 143G(1), ”.
In subsection (2B), after paragraph (b) insert—.
In paragraph 20(4) of Schedule 1ZA (enforcement costs), after paragraph (b) insert—.
Transitional provision
Rules made before Part 1 of this Schedule comes into force
The Financial Conduct Authority may identify general rules made under section 137A of the Financial Services and Markets Act 2000 before Part 1 of this Schedule comes into force and without complying with sections 143G and 143H of that Act (“pre-commencement rules”) that are to be Part 9C rules.
Where the Financial Conduct Authority identifies such rules, it must, as soon as reasonably practicable after Part 1 of this Schedule comes into force, publish—
a list of the pre-commencement rules that are to be Part 9C rules, and
a statement confirming that, in deciding that those pre-commencement rules should be Part 9C rules, the Financial Conduct Authority has—
considered the risks specified in or under section 143C(2) or 143D(2) and the matters specified in or under section 143G(1), and
considered, and consulted the Treasury about, the likely effect of the rules on relevant equivalence decisions (as defined in section 143G).
Rules included in the list published in accordance with sub-paragraph (2)(a) are to be treated for all purposes as Part 9C rules.
Pre-commencement consultation etc
In relation to Part 9C rules, the requirements of the provisions listed in sub-paragraph (2) may be satisfied by things done before Part 1 of this Schedule comes into force (as well as by things done after that time).
Those provisions are—
section 138I of the Financial Services and Markets Act 2000 (consultation);
sections 143G to 143I of that Act (inserted by Part 1 of this Schedule).
Relevant equivalence decisions
For the purposes of section 143G of the Financial Services and Markets Act 2000 (inserted by Part 1 of this Schedule), an equivalence decision may be a relevant equivalence decision by virtue of a notice in writing given by the Treasury before Part 1 of this Schedule comes into force (as well as by a notice given after that time).
Carbon target
In relation to the making of Part 9C rules that are made on or before 1 January 2022—
paragraph (c) of section 143G(1) of the Financial Services and Markets Act 2000 (duty to have regard to carbon target for 2050) does not apply, and
section 143H(1)(b) of that Act does not require an explanation in respect of matters specified in that paragraph.
Interpretation
In this Part of this Schedule, “Part 9C rules” has the same meaning as in the Financial Services and Markets Act 2000 (see section 143F of that Act, inserted by Part 1 of this Schedule).
Prudential regulation of credit institutions etc
New Part 9D of the Financial Services and Markets Act 2000
In the Financial Services and Markets Act 2000, after Part 9C (inserted by Schedule 2 to this Act) insert—
PRA's powers in relation to certain holding companies
Part 12B of the Financial Services and Markets Act 2000 (approval of certain holding companies by the PRA) is amended as follows.
Before section 192O insert— “ Interpretation ”.
Section 192O(1) (interpretation) is amended as follows.
Omit the definition of “section 192V rules”.
After that definition insert—.
Before section 192P insert— “ Approval ”.
Omit section 192V (rules imposing consolidated or sub-consolidated requirements).
After section 192X insert—.
In section 192Y(1) (power to impose penalty or issue censure), for paragraph (d) substitute—
Minor and consequential amendments
Bank of England Act 1998 (c. 11)
Section 9H of the Bank of England Act 1998 (directions to FCA or PRA requiring macro-prudential measures) is amended as follows.
In subsection (2) (definition of “regulated person”), for paragraph (b) substitute—
At the end insert—
Financial Services and Markets Act 2000 (c. 8)
The Financial Services and Markets Act 2000 is amended as follows.
In section 137G (the PRA's general rules), at the end insert—
In section 138J(10) (consultation by the PRA), for “section 138L” substitute “ sections 138L and 144E(3). ”
In section 138K (consultation: mutual societies), at the end insert—
Section 192O (interpretation of Part 12B) is amended as follows.
In subsection (1)—
in the definition of “Directive 2013/36/EU UK law”, omit the words following paragraph (b), and
after that definition insert—.
At the end insert—
In section 192R(3) (grant of approval)—
in paragraph (a) omit “, section 192V rules” and the “and” at the end, and
after that paragraph insert—.
Section 192T (measures) is amended as follows.
In subsection (1)—
omit the “and” at the end of paragraph (a),
in paragraph (b) omit “, section 192V rules”, and
at the end of paragraph (b) insert
In subsection (2)(c)—
omit “, section 192V rules”, and
at the end insert “ and with section 192XA rules ”.
In section 192Y(1) (power to impose penalty or issue censure)—
omit paragraph (c) (including the “or” at the end), and
after that paragraph insert—.
In section 417(1) (definitions), at the appropriate place, insert—.
In section 429(2) (parliamentary control of statutory instruments: affirmative procedure), before “214A” insert “ 144C(1), 144F, ”.
Capital Requirements Regulations 2013 (S.I. 2013/3115)
The Capital Requirements Regulations 2013 (meaning of “permission” etc) is amended as follows.
In regulation 2(1), in the definition of “appropriate regulator”, at the end insert “ , subject to regulation 39(2) ”.
Regulation 39 (meaning of “permission” etc) is amended as follows.
The existing text becomes paragraph (1).
In that paragraph, in the definition of “permission”, after paragraph (a) insert—.
After that paragraph insert—
Transitional provision
Pre-commencement consultation etc
In relation to general rules that are CRR rules, the requirements of the provisions listed in sub-paragraph (3) may be satisfied by things done before Part 1 of this Schedule comes into force (as well as by things done after that time).
In relation to section 192XA rules, the requirements of the provisions listed in sub-paragraph (3) may be satisfied by things done before Part 2 of this Schedule comes into force (as well as by things done after that time).
Those provisions are—
sections 144C to 144E of that Act (inserted by Part 1 of this Schedule).
Relevant equivalence decisions
For the purposes of section 144C of the Financial Services and Markets Act 2000 (inserted by Part 1 of this Schedule), an equivalence decision may be a relevant equivalence decision by virtue of a notice in writing given by the Treasury before Part 1 of this Schedule comes into force (as well as by a notice given after that time).
Carbon target
In relation to the making of CRR rules or section 192XA rules that are made on or before 1 January 2022—
paragraph (d) of section 144C(1) of the Financial Services and Markets Act 2000 (duty to have regard to carbon target for 2050) does not apply, and
section 144D(1) of that Act does not require an explanation in respect of matters specified in that paragraph.
Section 192V rules
Rules made by the Prudential Regulation Authority under section 192V of the Financial Services and Markets Act 2000 and in force immediately before the day on which the repeal of that section by Part 2 of this Schedule comes into force (“the repeal day”) are to be treated, on and after that day—
as validly made section 192XA rules, and
to the extent that they make provision about a matter described in section 144A(3) of the Financial Services and Markets Act 2000 (inserted by Part 1 of this Schedule), as validly made CRR rules.
Sections 192Y, 192Z and 192Z1 of the Financial Services and Markets Act 2000 (disciplinary measures) continue to have effect in relation to a contravention, before the repeal day, of a rule made under section 192V of that Act, despite the repeal of section 192Y(1)(c) of that Act.
Interpretation
In this Part of this Schedule—“CRR rules” has the same meaning as in the Financial Services and Markets Act 2000 (see section 144A of that Act, inserted by Part 1 of this Schedule);“general rules” has the meaning given in section 137G(2) of that Act;“section 192XA rules” has the same meaning as in Part 12B of that Act (see section 192O of that Act, as amended by Part 3 of this Schedule).
Amendments of the Capital Requirements Regulation
The Capital Requirements Regulation is amended as follows.
In Article 4A(1)(a) (definitions: references to PRA rulebook), for “as the rulebook has effect on IP completion day” substitute “ as amended from time to time ”.
In Article 92(3) (own funds requirements), for points (b) and (c) substitute—.
In Article 107(3) (approaches to credit risk), for “third-country investment firms and exposures to third country credit institutions and exposures to third country clearing houses and exchanges” substitute “ a third-country investment firm, a third-country credit institution and a third-country exchange ”.
In Article 144(1)(g) (competent authorities' assessment of an application to use an IRB Approach), for “Article 99” substitute “ Article 430 ”.
In Article 201(1) (eligibility of protection providers under all approaches), for point (h) substitute—
Article 223 (Financial Collateral Comprehensive Method) is amended as follows.
In paragraph 3, in the second subparagraph, for “institutions” substitute “ , institutions using the method laid down in Section 6 of Chapter 6 ”.
After paragraph 5 insert—
In Article 283 (permission to use the Internal Model Method), for paragraph 4 substitute—
For Article 298 substitute—
In Article 299(2) (items in the trading book), omit point (a).
In Article 384(1) (standardised method), in the definition of “EADi total”—
for “Title II, Chapter 6” (in the first place those words occur) substitute “ Chapter 6 of Title II ”, and
omit the words from “An institution using” to the end of the definition.
Article 500d (temporary calculation of exposure value of regular-way purchases and sales awaiting settlement in view of COVID-19 pandemic) is amended as follows.
In the heading, omit “Temporary”.
In paragraph 1, omit “until 27 June 2021,”.
Annex 2 (types of derivatives) is amended as follows.
In point 1, for point (e) substitute—.
In point 2, for point (d) substitute—.
For point 3 substitute—
Benchmarks: minor and consequential amendments
The Benchmarks Regulation is amended as follows.
Article 3(1) (definitions) is amended as follows.
In point (6) (administrator)—
after “means” insert—, and
at the end insert.
After point (25) insert—.
After point (36) insert—
In Article 3, after paragraph 1 insert—
In Article 11 (input data), after paragraph 4 insert—
In Article A20(5)(b) (review of critical benchmarks), for “determines” substitute “ determine ”.
Article 20 (critical benchmarks: conditions and other matters) is amended as follows.
In paragraph 5(b), for “determines” substitute “ determine ”.
In paragraph 5A(a)—
for “the values in points (a) and (c)(i) of paragraph 1 (the “thresholds”)” substitute “ the value in point (a) of paragraph 1 (“the paragraph 1(a) value”) ”, and
for “to the thresholds” substitute “ to the paragraph 1(a) value ”.
In paragraph 5A(b), for “the thresholds” substitute “ the paragraph 1(a) value ”.
In paragraph 6(a), for “thresholds” substitute “ values ”.
In paragraph 6(b), for “the thresholds in points (a) and (c)(i)” substitute “ the value in point (a) ”.
In Article 21(3) (mandatory administration of a critical benchmark), in the first subparagraph, in point (b), at the end insert “ (whether by the exercise of the FCA's powers under Article 23D or otherwise) ”.
After Article 26 insert—
In Article 29 (use of a benchmark), after paragraph 1 insert—
In Article 36(1) (register of administrators and benchmarks), after point (d) insert—
After Article 48 insert—
Gibraltar-based persons carrying on activities in the UK
After Schedule 2 to the Financial Services and Markets Act 2000 insert—
UK-based persons carrying on activities in Gibraltar
After Schedule 2A to the Financial Services and Markets Act 2000 (inserted by Schedule 6 to this Act) insert—
Gibraltar: minor and consequential amendments
Financial Services and Markets Act 2000 (c. 8)
The Financial Services and Markets Act 2000 is amended as follows.
In section 3A(3)(a) (expressions in which general definition of “regulator” does not apply), at the end insert—.
In section 33(1)(a) (withdrawal of authorisation), after “permission” insert “ or Schedule 2A permission ”.
In Part 5 (performance of regulated activities), after section 71I insert—
After section 137A insert—
After section 137G insert—
In section 213 (the compensation scheme), after subsection (9) insert—
In section 214 (provisions of the compensation scheme: general), before subsection (6) insert—
In section 224 (scheme manager's power to inspect documents held by Official Receiver etc), before subsection (4A) insert—
After section 367 insert—
Section 392 (application of sections 393 and 394: warning notices and decision notices) is amended as follows.
In paragraph (a), after “412B(4) or (8)” insert “ or paragraph 38, 42 or 69 of Schedule 2A or paragraph 11, 16 or 20 of Schedule 2B ”.
In paragraph (b), after “412B(5) or (9)” insert “ or paragraph 38, 42 or 69 of Schedule 2A or paragraph 11, 16 or 20 of Schedule 2B ”.
Section 395 (the FCA's and PRA's procedures) is amended as follows.
In subsection (13) (meaning of “supervisory notice”)—
for “section” (in the first place it occurs) substitute “ any of the following ”,
at the end insert—
After subsection (13) insert—
Omit section 409 (Gibraltar).
In section 417(1) (definitions), at the appropriate places insert—,, and.
In section 418 (carrying on regulated activities in the United Kingdom), after subsection (5B) insert—
Section 429 (parliamentary control of statutory instruments) is amended as follows.
In subsection (2) (affirmative procedure)—
after “90B” insert “ , 137AA(3), 137GA(2) ”, and
after “333T” insert “ or paragraph 5, 6, 58(3)(a), 59(3)(a) or 60(8) of Schedule 2A ”.
At the end insert—
In paragraph 24 of Schedule 1ZA (services for which the FCA may not charge fees), after paragraph (b) insert
In paragraph 32 of Schedule 1ZB (services for which the PRA may not charge fees), after paragraph (b) insert
Financial Services and Markets Act 2000 (Gibraltar) Order 2001 (S.I. 2001/3084)
The Financial Services and Markets Act 2000 (Gibraltar) Order 2001 is revoked.
Subsidy Control Act 2022
The Subsidy Control Act 2022 is amended as follows.
In section 25 (meaning of “deposit taker”) in subsection (1) omit paragraph (b) and the “or” preceding it.
In section 26 (meaning of “insurance company”) in subsection (1) omit paragraph (b) and the “or” preceding it.
In section 27 (subsidies for insurers that provide export credit insurance) in subsection (2), in the definition of “insurer”, omit paragraph (b) and the “or” preceding it.
Collective investment schemes authorised in approved countries
Provisions to be inserted in Chapter 5 of Part 17 of the Financial Services and Markets Act 2000
In Chapter 5 of Part 17 of the Financial Services and Markets Act 2000 (recognised overseas schemes), before section 272 (and the italic heading before that section) insert—
Minor and consequential amendments
Financial Services and Markets Act 2000 (c. 8)
The Financial Services and Markets Act 2000 is amended as follows.
In section 138I (consultation by the FCA), after subsection (9) insert—
Section 165 (regulators' powers to require information) is amended as follows.
In subsection (7)(b), after “section” insert “ 271A or ”.
At the end insert—
In section 237(2) (Part 17 definitions), in the definition of “the operator”—
in paragraph (ab) omit “and”, and
after paragraph (b) insert
In section 392 (application of third party rights to notices)—
in paragraph (a), before “280(1)” insert “ 271N(2), 271R(3), ”, and
in paragraph (b), before “280(2)” insert “ 271N(3), 271R(4), ”.
In section 395(13) (meaning of supervisory notice), before paragraph (f) insert—.
In section 429(2) (regulations subject to affirmative procedure), after “262,” insert “ 271S, ”.
The Alternative Investment Fund Managers Regulations 2013 (S.I. 2013/1773)
Part 6 of the Alternative Investment Fund Managers Regulations 2013 (marketing of alternative investment funds) is amended as follows.
In regulation 57 (marketing of third country AIFs by full-scope UK AIFMs), after paragraph (1) insert—
In regulation 58(1) (marketing of AIFs managed by small third country AIFMs), at the end insert “ , except where the AIF is recognised under section 271A of the Act ”.
In regulation 59 (marketing of AIFs managed by other third country AIFMs)—
in paragraph (1), at the end insert “ , except where the AIF is recognised under section 271A of the Act ”, and
in paragraph (4A), for “collective investment scheme” substitute “ AIF ”.
The Collective Investment Schemes (Amendment etc.) (EU Exit) Regulations 2019 (S.I. 2019/325)
Part 6 of the Collective Investment Schemes (Amendment etc.) (EU Exit) Regulations 2019 (temporary recognition of collective investment schemes) is amended as follows.
In regulation 62(3) (end of temporary recognition)—
in sub-paragraph (a)(i)—
before “275(3)” insert “ 271H(1) or ”, and
for “section 272 of that Act” substitute “ section 271A or 272 of that Act (as applicable) ”,
in sub-paragraph (a)(ii)—
before “276(2)(a)” insert “ 271H(3) or ”, and
for “section 272 of that Act” substitute “ section 271A or 272 of that Act (as applicable) ”,
in sub-paragraph (b)(ii), after “section” insert “ 271A or ”,
in sub-paragraph (c)(i), after “section” insert “ 271A or ”,
in sub-paragraph (c)(ii), for “that section” substitute “ either of those sections ”, and
in sub-paragraph (d), for “3” substitute “ 5 ”.
In regulation 67 (power to extend the period for temporary recognition), omit paragraph (2).
After regulation 67 insert—
Amendments of the Markets in Financial Instruments Regulation
Introduction
The Markets in Financial Instruments Regulation is amended as follows.
Scope
In Article 1 (subject matter and scope), after paragraph 4 insert—
Definitions
In Article 2(1) (definitions), after point (61) insert—.
Provision of services by third-country firms following equivalence determination
In the heading of Title 8, for “DECISION” substitute “ DETERMINATION ”.
Article 46 (general provision about provision of services etc by third-country firms following an equivalence decision) is amended as follows.
In paragraph 1, for “Article 47” substitute “ Article 48 ”.
In paragraph 2—
for point (a) substitute—, and
after point (c) insert—
Omit paragraph 2A.
In paragraph 4—
in the first subparagraph, for the words from “adoption” to the end substitute “ making of a determination by the Treasury under Article 47(1) that the legal and supervisory arrangements of the third country in which the third-country firm is authorised satisfy the requirements described in Article 47(1). ”,
after the first subparagraph insert—, and
in the following subparagraph, after “all” insert “ further ”.
In paragraph 5, in the second subparagraph, for “in writing and in a prominent way” substitute “ in writing, in a prominent way and in such form as the FCA may direct ”.
After paragraph 5 insert—
After paragraph 6 insert—
Omit paragraph 7.
Equivalence determination
Article 47 (equivalence determination) is amended as follows.
For paragraph 1 substitute—
In paragraph 2—
omit point (c), and
at the end insert—
At the end insert—
Requirements
After Article 48 insert—
Temporary prohibitions and restrictions and withdrawal of registration
Article 49 (withdrawal of registration) is amended as follows.
For the heading substitute— “ Temporary prohibitions and restrictions and withdrawal of registration ”.
Before paragraph 1 insert—
In paragraph 1—
in the opening words, for “shall” substitute “ may ”,
for points (a) and (b) substitute—, and
omit point (d) (and the “and” before it).
After paragraph 1 insert—
At the end insert—
Temporary prohibitions and restrictions and withdrawal of registration: procedure
After Article 49 insert—
FCA directions and rules
In the heading of Title 9, after “DIRECTIONS” insert “ , RULES ”.
In the heading of Article 50B (FCA Directions), at the end insert “ identifying relevant area of the UK ”.
After that Article insert—
The requirements of section 138I of the Financial Services and Markets Act 2000, in so far as they apply in connection with rules made under Article 46(6B) or 48A of the Markets in Financial Instruments Regulation, may be satisfied by things done before paragraph 12 of this Schedule comes into force (as well as by things done after that time).
Transitional provisions
Omit Article 54 (transitional provisions).
Variation or cancellation of Part 4A permission on initiative of FCA: additional power
The Financial Services and Markets Act 2000 is amended as follows.
After section 55J insert—
After Schedule 6 insert—
In section 133 (proceedings before Tribunal: general provision), after subsection (5) insert—
In section 392 (application of sections 393 and 394)—
in paragraph (a), at the end insert “ or paragraph 5(6) of Schedule 6A ”, and
in paragraph (b), at the end insert “ or paragraph 5(7) of Schedule 6A ”.
Forfeiture of money: electronic money institutions and payment institutions
Anti-terrorism, Crime and Security Act 2001 (c. 24)
Schedule 1 to the Anti-terrorism, Crime and Security Act 2001 (forfeiture of terrorist property) is amended as follows.
Part 4B (forfeiture of terrorist money held in bank and building society accounts) is amended in accordance with paragraphs 3 to 8.
In the Part heading, for “bank and building society” substitute “ certain ”.
Paragraph 10Q (application for account freezing order) is amended as follows.
In sub-paragraph (1), for “bank or building society” substitute “ relevant financial institution ”.
After that sub-paragraph insert—
In sub-paragraph (7), at the appropriate places insert—”, and.
In paragraph 10V(1) (restriction on proceedings and remedies), for “bank or building society” substitute “ relevant financial institution ”.
In paragraph 10W(6)(b) (account forfeiture notice), for “bank or building society” substitute “ relevant financial institution ”.
Paragraph 10Y (lapse of account forfeiture notice) is amended as follows.
In sub-paragraph (6), for “bank or building society” substitute “ relevant financial institution ”.
In sub-paragraph (7)—
for “If the bank or building society” substitute “ If the relevant financial institution ”, and
for “on the bank or building society” substitute “ on the institution ”.
In paragraph 10Z2(7)(a) (forfeiture order), for “bank or building society” substitute “ relevant financial institution ”.
In Part 6 (interpretation), in paragraph 19(1), at the appropriate places insert—,, and.
Proceeds of Crime Act 2002 (c. 29)
Part 5 of the Proceeds of Crime Act 2002 (civil recovery of the proceeds etc of unlawful conduct) is amended as follows.
Chapter 3B (forfeiture of money held in bank and building society accounts) is amended in accordance with paragraphs 12 to 20.
In the Chapter heading, for “bank and building society” substitute “ certain ”.
In the italic heading before section 303Z1, for “bank and building society” substitute “ certain ”.
Section 303Z1 (application for account freezing order) is amended as follows.
In subsection (1), for “bank or building society” substitute “ relevant financial institution ”.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
In subsection (6), at the appropriate places insert—, and.
In section 303Z2(3) (restrictions on making of application under section 303Z1), for “bank or building society” substitute “ relevant financial institution ”.
In section 303Z6(1), for “bank or building society” substitute “ relevant financial institution ”.
In section 303Z8(4), for “bank or building society” substitute “ relevant financial institution ”.
In section 303Z9(6)(b) (account forfeiture notice: England and Wales and Northern Ireland), for “bank or building society” substitute “ relevant financial institution ”.
Section 303Z11 (lapse of account forfeiture notice) is amended as follows.
In subsection (6), for “bank or building society” substitute “ relevant financial institution ”.
In subsection (7)—
for “If the bank or building society” substitute “ If the relevant financial institution ”, and
for “on the bank or building society” substitute “ on the institution ”.
In section 303Z14(7)(a) (forfeiture order), for “bank or building society” substitute “ relevant financial institution ”.
In section 316(1) (general interpretation of Part 5), at the appropriate places insert—,, and.