On 28 March 2024, the Bank of England (BoE) published a Consultation Paper (CP) on proposed changes to statements of policy and procedure following the Financial Services and Markets Act 2023 (FSMA 2023).

FSMA 2023 introduced several important updates to the UK’s regulatory framework for financial services and certain of these changes create new, or expand existing, enforcement powers of the BoE (including the PRA). The BoE’s existing approach to enforcement is set out in The Bank of England’s approach to enforcement: statement of policy and procedure (the Enforcement SoPP). In the CP the BoE proposed certain changes to the Enforcement SoPP to explain the BoE’s (including the PRA’s) proposed approaches to using the enforcement powers introduced or extended by FSMA 2023 or contained in the Securitisation Regulations 2024 (the Regulations).

The proposals in the CP include:

  • A new chapter 6 to Annex 1 to the Enforcement SoPP which would set out the PRA’s policy on the imposition and amount of penalties under regulation 42(2) and (3) of the Regulations.
  • A new chapter 9 to Annex 1 of the Enforcement SoPP, setting out the PRA’s proposed policy concerning the imposition and period of temporary prohibitions imposed under regulation 37 of the Regulations.
  • To apply certain of the BoE’s existing policies, concerning the use of enforcement powers under Part 5 of the Banking Act 2009 (BA 2009), to operators of a recognised payment system (RPS) using digital settlement assets (DSA), DSA service providers and specified service providers of such RPS or of DSA SPs as appropriate.
  • A new chapter in the Enforcement SoPP detailing the BoE’s policy for determining whether to impose a financial penalty, and the method for calculating the amount of any financial penalty in the context of wholesale cash distribution. FSMA 2023 amends the BA 2009 to confer new powers on the BoE to oversee certain participants in the wholesale cash industry recognised by HM Treasury by order as having market significance which perform relevant functions in relation to wholesale cash distribution activity (recognised persons), and individuals who are specified by HM Treasury by order (specified persons).
  • New statements in relation to critical third parties.

The deadline for comments on the CP is 28 June 2024.

The BoE proposes that the implementation date for the changes resulting from the CP would be Q4 2024.