“Edinburgh” reforms highlight ring-fencing, CCA and post-Brexit changes

The Chancellor has announced a set of so called “Edinburgh reforms” to the financial services regulatory framework. At an industry roundtable, he will set out plans to repeal and replace “hundreds of pages” of “burdensome” EU retained laws, which will be done using powers within the FSM Bill, with the aim of establishing a smarter regulatory framework for the UK. These will include making progress over the next year on the Solvency II replacement.

There will be two tranches to the plan – of which the first will focus on changes that will be most beneficial for UK growth and competitiveness.

Additional measures will, among other things:

  • overhaul the prospectus regime;
  • review the provision of investment research, including the MiFID unbundling rules;
  • trial a new class of wholesale market venue that will improve companies’ access to capital before they list;
  • reform the ring-fencing regime primarily by “freeing” retail-focussed banks from it;
  • aim to ensure the FCA will have sufficient rule-making powers over its retained EU payments legislation, using the FSM Bill to provide those powers; and
  • initiate a review of the SMCR in Q1 2023.

The Chancellor has also written to the PRA and FCA emphasising their secondary competitiveness objectives and how they are expected to meet them.

Separately, the Government is publishing its first consultation on CCA modernisation and will soon consult on establishing a UK CBDC. Finally, the Government is committing to publish a new green finance strategy in early 2023.

The Government press release also notes that the FSM Bill is expected to obtain Royal Assent by Spring 2023.

Emma Radmore