Regulatory Initiatives Grid – Update from the co-chairs July 2023 [pdf]

The Regulatory Initiatives Forum has published a statement providing an update on the Regulatory Initiatives Grid which is typically published semi-annually to keep firms informed of major ongoing regulatory initiatives. The latest publications have been somewhat delayed due to the introduction of the Financial Services and Markets Act 2023 (FSMA 2023) which entirely revamps the financial services regulatory landscape in UK. Below is a summary of the key points noted in the statement:
(1) FSMA 2023:
The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA), both members of the Forum, are currently taking steps to incorporate new obligations and accountability mechanisms introduced by FSMA 2023. These changes are likely to impact the regulatory initiatives in the pipeline and will lead to major adjustments in the way financial services are regulated. Furthermore, the FSMA 2023 enables the replacement and / or removal of retained EU legislation (REUL). Corresponding initiatives, e.g. for the replacement of the Retained Prospectus Regulation (UK PR), Solvency II, or the Retained Securitization Regulation (UK SR), are well underway.
(2) Other significant developments since the last update:
Since the last Grid publication in February 2023, several significant developments have occurred outside of the FSMA 2023. These include, among others:
– The Bank of England (BoE) launched its System-Wide Exploratory Scenario exercise in June to investigate the behaviors of banks and non-bank financial institutions under stress. The key objective is to find out how such stress for financial institutions can amplify shocks in the markets and potentially pose risks to UK financial stability.
– The Treasury published an updated Green Finance Strategy 2023 in March this year, aimed at positioning the UK market to support the transition to a net-zero economy.
– Sustainability Disclosure Requirements and investment labels: Following a consultation and feedback, the FCA will publish a corresponding Policy Statement in Q4 2023 (originally planned for Q3). These policy changes will enhance sustainability information available to consumers, benefiting the UK’s asset management sector.
– The FCA announced the cessation of all remaining US dollar LIBOR settings and made arrangements so that the 1-, 3-, and 6-month US dollar LIBOR tenors will continue to be published after June 30, 2023 – the cessation date of those terms – on a synthetic basis.
– In June, the FCA published final rules to support the prompt implementation of the Government’s Mortgage Charter which offers various options to mortgage borrowers to temporarily cut down on their monthly payments.
(3) Way forward:
The Grid will be utilized to provide further updates on the progress of the regulatory framework reforms that have been brought about by FSMA 2023. This suggests that the Grid will play a key role in keeping firms informed about the changes resulting from the Act and how they will affect the financial services sector.
A comprehensive update of the Grid is scheduled for the last quarter of 2023. During this update, all changes for all initiatives will be provided, allowing firms to have a complete understanding of the regulatory pipeline. Following the full update in the last quarter of 2023, the regulators plan to return to their usual intervals of publishing biannual updates to the Grid. This regular publication will likely keep firms well-informed about upcoming regulatory initiatives and changes in the financial services sector.