By Christopher Walker

On 21 October the Financial Services Bill (the "Bill") - a proposal described as a key next step in shaping the UK's “Future Regulatory Framework” outside of the EU - was introduced to the UK Parliament for its first reading.

The Bill’s intention is to enhance the UK's financial regulatory standards across a range of areas and “[build] on the strengths of the existing FSMA model”.

As such, the Bill features a number of areas of interest to FCA regulated firms, including (non-exhaustively):

  • updates to the prudential regulation of investment firms (i.e. the Investment Firms Prudential Review) to "enable the implementation of a more proportionate prudential framework for [firms’ regulation]" and the implementation of the final Basel 3 standards;
  • changes to the FCA’s cancellation of authorisation process;
  • a new route for overseas funds to market to retail investors through the introduction of a new “Overseas Funds Regime, which "will introduce new equivalence regimes for retail investment funds and money market funds, [simplifying] the process for investment funds that are domiciled overseas to market to UK consumer";
  • updates to the Markets in Financial Instruments Regulations regime in respect regulating the activities of third country investment firms following an equivalence decision;
  • a new framework for the UK's regulatory relationship with Gibraltar under the “Gibraltar Authorisation Regime”, which will enable "long-term market access between the UK and Gibraltar for financial services firms on the basis of alignment and cooperation, now that the UK and Gibraltar have left the EU"; and
  • amendments to the Benchmarks Regulation intended to help manage and direct an orderly wind-down of critical benchmarks such as LIBOR - the FCA has separately urged market participants to maintain their focus on the transition away from LIBOR by the end of 2021.

The Bill is due for a second reading in the House of Commons on 9 November and its current status can be found here.