On 24 November 2023, the PRA and FCA issued consultation papers on prudential assessment of acquisitions and increases in control.

The PRA consultation paper is PRA CP25/23 and the FCA consultation paper is FCA CP23/23.

Part XII of the Financial Services and Markets Act 2000 (FSMA) establishes the UK legal framework for change in control assessments in the UK and implemented EU Directive 2007/44/EC (the Acquisitions Directive). On 1 October 2017, the European Supervisory Authorities updated the non-binding guidelines for the prudential assessment of acquisitions of a qualifying holding (known as the 3L3 Guidelines). The 3L3 Guidelines contain an EU-wide common understanding of the assessment criteria that Member State competent authorities will use in the prudential assessment of acquisitions of qualifying holdings and a list of information that proposed acquirers should include in their notifications to Member State competent supervisory authorities. Post Brexit the PRA and FCA complies with the 3L3 Guidelines except for the sections relating to the aggregation of indirect holdings (the test for identifying certain controllers) as it is inconsistent with the FSMA.

The PRA and FCA consultation papers contain proposals to replace the 3L3 Guidelines with a new PRA supervisory statement and FCA guidance. The proposed new supervisory statement and FCA guidance would largely replicate the 3L3 Guidelines. However, there would be some re-phrasing, simplification, and changes to align with the UK approach and to reflect the modified condition power under the Financial Services and Markets Act 2023. The new supervisory statement would also replace Supervisory Statement 33/15 which the PRA proposes to delete. Further information regarding the key differences between the 3L3 Guidelines and the proposals can be found in paragraphs 2.6 to 2.19 of PRA CP25/23.

The deadline for comments on both consultation papers is 23 February 2024.