In the round

Alongside the government’s Edinburgh Reform proposals, HM Treasury published its policy statement: “Building a smarter financial services framework for the UK”.  This sets out the government’s implementation plan to deliver a comprehensive FSMA model of regulation through the powers and tools established in the Financial Services and Markets Bill (currently going through Parliament). 

The majority of the Policy Statement focuses on the question of how the government proposes to address the repeal and reform of retained EU law (“REUL”), which was “onshored” into UK legislation post-Brexit. HM Treasury says that the effect of having these regulatory requirements in legislation is that it is difficult and time-consuming to update, and places substantial resource pressures on Parliament which is asked to consider a large volume of technical provisions.

The current vision is for financial services regulators to take responsibility for setting the direct regulatory requirements which are currently set out in REUL, acting within a framework set by government and Parliament.  The Policy Statement recognises the need for HM Treasury and regulators to set out their plans for replacing REUL clearly in relation to each area of regulation so that businesses can plan ahead and adjust to regulatory change in an orderly way.

The task requires more than simply repealing EU law. In HM Treasury’s own words: “It requires fundamental changes to the legislative framework that we have inherited from the EU so that the detailed regulatory requirements in EU law can be safely repealed and new rules put in place by the financial services regulators”.  It is recognised that such a task is likely to take several years.

In all instances, REUL will be repealed either without replacement or with replacement legislation which is consistent with the intended FSMA model. This aims to provide an opportunity to deliver policy change so that regulation better meets the needs of UK markets.

The fine print


Treasury has identified 43 “core” files (areas of REUL) in scope of the programme (including EU legislation such as MiFID and Solvency II).

The following principles will guide the government’s approach to prioritisation:

  • the need to update rules to reflect the specific features of the UK market and our position outside the EU (prioritising policy changes that can deliver concrete benefits to the UK);
  • as far as possible the sequencing should be logical and support the design of an accessible and streamlined framework (making regulation easier to understand and navigate); and
  • the pace and cost of regulatory change must be manageable and considered.


Regulatory requirements currently set out in REUL will be dealt with in one of three ways:

  • Removed - repealed without replacement;
  • Replaced with provisions consistent with the FSMA model; or
  • Replaced with provisions consistent with the FSMA model while also delivering targeted policy change.


The government plans to deliver the overall programme by splitting REUL into “tranches”. Work is already underway on the first tranche of REUL in relation to delivering the outcomes arising from the Wholesale Markets Review, Lord Hill’s Listing Review, the Securitisation Review, and the Review into the Solvency II Directive.

The second tranche is focused on those areas with the biggest potential benefits to deliver improvements to UK economic growth, consisting of:

  • Remaining implementation of the outcomes of the Wholesale Markets Review, which identifies significant opportunities to reform the MiFID framework;
  • Continuing with Solvency II;
  • The Packaged Retail and Insurance-Based Investment Products (PRIIPS) Regulation;
  • The Short Selling Regulation;
  • The Taxonomy Regulation;
  • The Money Market Funds Regulation;
  • Payment Services Directive and the E-Money Directive;
  • Insurance Mediation and Distribution Directives;
  • The Capital Requirements Regulation and Directive;
  • Long-Term Investment Funds Regulation;
  • The consumer information rules in the Payment Accounts Regulations 2015.

The government expects to make significant progress on Tranches 1 and 2 by the end of 2023.

Indicative SIs

The government has also published three illustrative statutory instruments (SIs) alongside its Policy Statement in order to give a more detailed understanding of the approach the government is taking. These relate to the:

The illustrative SIs are intended to give an indication of how the powers relating to REUL in the Financial Services and Markets Bill will be used and how the relevant SIs may be structured. 

For further UK financial services regulatory updates, please visit the Burges Salmon blog.