On 22 April 2024, a statutory instrument – the Financial Services and Markets Act 2000 (Disapplication or Modification of Financial Regulator Rules in Individual Cases) Regulations 2024 (the SI) – was published.

The Financial Services and Markets Act 2023 (FSMA 2023) introduced several new legislative powers which work together as a set of tools as the Government repeals assimilated law to deliver a Smarter Regulatory Framework (SRF) for financial services. One of the tools introduced by FSMA 2023 is new section 138BA of the Financial Services and Markets Act 2000 (FSMA) which provides a power for HM Treasury to make regulations to grant the financial services regulators the ability to disapply or modify rules made by the regulators under FSMA.

As such, the SI, which is made under section 138BA of FSMA, grants the Prudential Regulation Authority (PRA) the ability to disapply or modify the application of any of its rules made under FSMA, where appropriate, to take into account the circumstances and business models of individual firms. This will not include conduct rules and PRA rules relating to threshold conditions. The Government notes that the ability to tailor regulation to individual firm circumstances is particularly important for firms regulated by the PRA, as PRA regulated banks, investment firms and insurers are large and complex entities with varied and specialised business models, for which a highly responsive and tailored regulatory approach is required. Exercising the section 138BA power in this way, covering all PRA rules made under FSMA, is intended to maximise the ability of the PRA to tailor the application of its rules in response to requests from, or with the consent of, individual firms.

The SI was made on 18 April 2024 and comes into force on 30 June 2024.