On 22 March 2024, HM Treasury (HMT) published a Policy Paper on the next phase of “Building a Smarter Financial Services Regulatory Framework for the UK”.

The Policy Paper outlines the impact and progress of the programme so far, work underway and the Government’s approach on the next phase of the Smarter Regulatory (SRF) Framework.

Progress so far

The Government has identified 777 pieces of assimilated law (retained EU law) relating to financial services within scope of the SRF programme. As of February 2024, 44% of assimilated law relating to financial services has been removed, totalling 344 different instruments. Of these, around 140 were repealed as part of the preparations for Brexit. The Government also repealed the European Long-Term Investment Funds Regulation as the fund structure it regulates is now obsolete, with the UK’s own Long Term Asset Fund in place to help unlock investment and unnecessary assimilated law requirements in the Payment Accounts Regulations, which are related to fee information placed on current account providers, creating the flexibility to tailor requirements to the UK market.

The Government also commenced the repeal of statutory restrictions which prevented the UK’s financial services regulators from making rules that modified the effect of assimilated law, with effect from the end of 2023.

The Government has made or laid statutory instruments (SIs) to replace:

  • Solvency II.
  • The Prospectus Regulation.
  • The Data Reporting Services Regulations.
  • The Securitisation Regulation.
  • The Payment Services Regulations 2017.

The Government has also commenced the repeal of legislation relating to:

  • The Insurance Mediation Directive and the Insurance Distribution Directive.
  • The Electronic Money, Payment Card Interchange Fee, and Payment Services (Amendment) Regulations 2023.

The Government has also published SIs for technical feedback that will replace:

  • The Short Selling Regulation.
  • The Packaged Retail and Insurance Based Investment Products Regulation.
  • The Money Market Funds Regulation.

Tranche 3

The Government continues to review assimilated law repealed by the Financial Services and Markets Act 2023 (FSMA 2023), subject to commencement, to identify the areas where policy reform should be prioritised.

The next tranche, Tranche 3, will include:

  • The Alternative Investment Fund Managers Directive.
  • The Undertakings for Collective Investment in Transferable Securities Directive.
  • Continuing with Payment Services and E-Money Directives reform. This follows from the Payment Services Regulations Call for Evidence and Review conducted in 2023, the Future of Payments Review report conducted in 2023, and the Government’s forthcoming National Payments Vision.
  • The European Market Infrastructure Regulation, beginning with Titles III, IV and V relating to central counterparties.
  • The Markets in Financial Instruments Directive. Continuing the work on the MiFID II framework following on from the Wholesale Markets Review, HMT will next consider MiFID II’s organisational requirements and operating conditions for investment firms and the provisions in the Markets in Financial Instruments Regulations that relate to transaction reporting.

For each of these, the Government will undertake a policy review, where necessary, to determine what should be retained in legislation, and the respective future roles of HMT and the regulators. Alongside this, HMT will review the 2019 and the 2020 Equivalence Determinations Regulations to restate necessary provisions and ensure that onshored equivalence decisions are in scope of the new Deference Accountability Mechanism in FSMA 2023.


Due to the significance and size of the above legislation the Government intends to adopt a multi-staged approach to reviewing and replacing them. This aims to address the burden on industry and allow progress to be made incrementally. That means that, in addition to the remaining work on previous areas, the Government in coordination with the regulators will initially focus only on those key areas for Tranche 3.

As well as the Regulatory Initiatives Grid, stakeholders should refer to the collection page on GOV.UK – A Smarter Regulatory Framework for financial services – which contains links to the latest materials and includes those SIs which have been published in draft for technical feedback in advance of laying before Parliament.