On 14 June 2022, HM Treasury made The Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2022.
The draft statutory instrument makes consequential changes as a result of the Financial Services Act 2021 which introduced the framework for the UK Investment Firms Prudential Regime (IFPR) and enabled the PRA to implement the remaining aspects of the Basel 3 standards through regulator rules. It also enables the future implementation of the Basel 3.1 standards.
The draft statutory instrument repeals the Banking Act 2009 (Exclusion of Investment Firms of a Specified Description) Order 2014 as it is redundant following the removal of FCA-regulated investment firms from the UK resolution regime. It also makes transition provision for risk retention requirements for certain securitisations following the implementation of the IFPR. These relate to the retention of a material net economic interest in a securitisation by the originator, sponsor or original lender to better align their interests with those of investors.
The draft statutory instrument also makes amendments to ensure that short-term liabilities owed to both PRA-regulated and FCA-regulated investment firms with permission to underwrite or deal on own account will continue to be exempt from bail-in.
It also addresses further deficiencies arising from the withdrawal of the UK form the EU
When finalised the draft statutory instrument comes into force on 17 August 2022.