On 27 November 2024, the Financial Conduct Authority (FCA) published a consultation paper, CP24/24, on proposals to transfer the firm-facing requirements of the MiFID Organisational Regulation (MiFID Org Regulation) into FCA Handbook rules.

Background

The UK version of the MiFID Org Regulation contains conduct rules as well as systems and controls rules to ensure market integrity and investor protection. It applies directly to UK MiFID investment firms. However, HM Treasury (HMT) confirmed in its policy paper on next steps for reforming the UK’s MiFID framework that it would revoke the firm-facing regulations within the MiFID Org Regulation so that they can be replaced in the FCA Handbook.

The FCA’s proposals

In CP24/24, the FCA sets out its proposals to transfer the requirements from the MiFID Org Regulation into its Handbook when HMT begins the repeal of the MiFID Org Regulation. The FCA proposes to retain the current substance of the requirements in order to provide continuity for firms. Provisions that are not replaced in regulatory rules will either be restated or repealed by HMT to coincide with the FCA Handbook rules coming into force.

Chapter 4 of CP24/24 is a discussion chapter about further reform (either now or in the future) aimed at making the rules better suited to the range of UK authorised firms and clients they provide services to. This includes in circumstances where the Consumer Duty does not apply and considers how the FCA could rationalise or improve MiFID II derived conduct and organisational rules. The chapter also considers whether and how the client categorisation rules could work more effectively. 

Next steps

The deadline for responses to CP24/24 is 28 February 2025, except in relation to the discussion in Chapter 4 for which the deadline is 28 March 2025.

The FCA flags that the Prudential Regulation Authority (PRA) will publish a separate consultation paper on restating relevant firm-facing provisions in the MiFID Org Regulation into PRA rules, and that HMT will publish a draft statutory instrument (SI) setting out how the Government will deal with the non-firm facing elements of the assimilated MiFID Org Regulation. Once the PRA has published its consultation and HMT has published the draft SI, the FCA plans to publish feedback on responses to CP24/24 and issue a policy statement.

PRA plans for equivalent consultation

Following the publication of CP24/24, the PRA published a statement announcing that it plans to publish its equivalent consultation paper in Q1 2025. It noted that the consultation would represent an important step in adapting the UK’s prudential regime for CRR firms inherited from the EU into a framework consistent with the UK’s approach to financial services regulation. Once the consultation period has closed, the PRA plans to analyse the responses with the aim of publishing a policy statement on the same day as the FCA in H2 2025.