On 29 June 2023, the Financial Services and Markets (FSM) Bill received Royal Assent. The new Financial Services and Markets Act 2023 is a landmark piece of legislation, intended to ‘seize the opportunities of Brexit by tailoring financial services regulation to fit UK markets’.

Key provisions

The FSM Act contains a range of new measures and powers, including provisions that:

  • Facilitate the repeal of retained EU laws by HM Treasury.
  • Introduce new secondary objectives for the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) to facilitate the growth and international competitiveness of the UK economy, along with changes to enhance the scrutiny and accountability of the regulators.
  • Enable the delivery of key Edinburgh Reforms (announced in December 2022), including the proposed simplification of the UK prospectus regime.
  • Implement the key outcomes of the Wholesale Markets Review.
  • Enable the regulation of cryptoassets.
  • Establish regulatory sandboxes to facilitate the use of new technologies such as blockchain in financial markets.

For more information on the key provisions, please see our detailed blog from July 2022 on the Bill as introduced to Parliament.

Amendments to the Bill

During its progress through Parliament, amendments made to the FSM Bill (now Act) covered subjects including (amongst others):

  • Overseas central counterparties (CCPs) (see our blog for further details).
  • Accountability of the regulators, including reporting and consultation requirements.
  • Clarifying that the powers relating to financial promotion, regulated activities and designated activities can be used to regulate cryptoassets.
  • Sustainability disclosure requirements.
  • UK net zero emissions targets and environmental targets.
  • Review of forest risk commodities.

At the time of writing, the FSM Act has not yet been published – we will publish a further short blog on it once it has been. We will also, in the coming days, be producing a redline comparison showing the differences between the FSM Act (once published) and the Bill as introduced to Parliament. Please contact us if you would like a copy. In addition, we will be publishing further blogs and briefings on the changes introduced by the FSM Act.

Next steps for impacted firms

Although this piece of legislation has now received Royal Assent, many of its provisions will require implementation by the FCA, PRA and/or HM Treasury before they begin to apply to firms. In some of these areas work has already begun on developing the relevant secondary legislation or regulatory rules, but the process is likely to take some time. In the meantime, firms should familiarise themselves with the reforms facilitated by the FSM Act and look out for consultation papers and other publications from HM Treasury and the regulators on these topics.