On 28 November 2018, there was published on legislation.gov.uk The Banks and Building Societies (Priorities on Insolvency) Order 2018 (the Order), together with an explanatory memorandum. The Order implements the Bank Creditor Hierarchy Directive which in turn amends the Bank Recovery and Resolution Directive, specifically the ranking of unsecured debt within the insolvency hierarchy, providing for a new class of secondary non-preferential debt to be issued by financial firms.

Firms may issue this new class of debt to meet their obligation to have sufficient loss absorbing and recapitalisation capacity in the event of resolution. This new class of debt ranks below other senior debt (but above subordinated debt) in the creditor hierarchy. The explanatory memorandum notes that the new class of debt should consequently enhance legal certainty and thereby reduce the risk that any creditor is left worse off in the event of resolution than they would be in an insolvency.