On 3 July 2026, there was published a draft statutory instrument (SI) The Overseas Prudential Requirements Regime (Credit Institutions and Investment Firms) Regulations 2026.

Background

The UK Capital Requirements Regulation (UK CRR) was revoked by the Financial Services and Markets Act 2023 (FSMA 2023) subject to commencement by HM Treasury. This revocation allows detailed, firm-facing regulatory requirements to be set by regulators within an overall policy framework set by government and Parliament. This approach is known as the ‘FSMA model’ of regulation.

The Government is using this SI to restate in legislation the equivalence provisions that are currently set out in the UK CRR and which need to be maintained in legislation in line with the government’s approach to Overseas Recognition Regimes.

Summary

If the draft SI is made as published, it would make the following changes to the law:

  • This instrument restates the Treasury’s powers in Articles 81(1)(a)(iii), 82(a)(iii), 107(4), 114(7), 115(4), and 116(5) of the UK CRR, which were revoked by section 1 of, and Schedule 1 to FSMA 2023, with that revocation set to commence on 1 January 2027.
  • These changes are intended to preserve the overall scope and effect of the relevant prudential equivalence regimes and existing decisions made under those regimes, except for the modifications made in relation to exposures to exchanges and exposures to investment firms.
  • The instrument does this by restating the existing UK CRR equivalence regimes in legislation as one Overseas Prudential Requirements Regime (OPRR).
  • The scope of the new OPRR will also enable HM Treasury to designate an overseas jurisdiction in relation to banks’ exposures to covered bonds in that jurisdiction. The precise prudential effect of any designations made under the OPRR will depend on the corresponding treatment set out in PRA rules.

Next steps

Further consequential amendments arising from the revocation of the Capital Requirements Regulation (CRR) will be made in a separate instrument before the end of the year and in advance of 1 January 2027.