On 3 December 2020, there was published on legislation.gov.uk The Financial Holding Companies (Approval etc.) and Capital Requirements (Capital Buffers and Macro-prudential Measures) (Amendment) (EU Exit) Regulations 2020 together with an explanatory memorandum. The purpose of the statutory instrument is to implement in the UK the Capital Requirements Directive V (CRD V).

HM Treasury’s CRD V implementation updates the current EU prudential regime by: exempting non-systemic investment firms; creating a holding company approval regime, and requiring certain holding companies to be responsible for sub-consolidated and consolidated prudential requirements; updating the macro-prudential tools available to Member States (which includes the UK until implementation completion day); and updating the confidential information-sharing regime with international bodies.

The Government is legislating through the Financial Services Bill to introduce a new prudential regime for investment firms – the Investment Firms Prudential Regime (IFPR). This new regime will broadly reflect the EU’s Investment Firms Regulation / Investment Firms Directive but will be tailored to the UK. With that in mind, the UK’s implementation of CRDV, through this statutory instrument, will not apply to non-systemic (FCA regulated) investment firms to whom the IFPR will apply (except where making consequential amendments to existing provisions).