The Financial Services and Markets Act 2023 (Commencement No. 2 and Transitional Provisions) Regulations 2023

The Financial Services and Markets Act 2023 (Commencement No. 2 and Transitional Provisions) Regulations 2023 were recently published on legislation.gov.uk, the official UK website for the publication of legal documents. The regulations implement various provisions of the Financial Services and Markets Act 2023 as regards financial promotions, the powers of the Financial Conduct Authority (FCA), and regulatory oversight of both the FCA and the Prudential Regulation Authority (PRA), and provide corresponding transitional arrangements.
Specifically, these Regulations, which are the second commencement regulations under the Financial Services and Markets Act 2023 (c. 29) and which are NOT expected to have any (significant) impact upon financial market participants, contain the following key provisions:
(1) They bring into force Section 20 (financial promotion) and Schedule 5 (financial promotion: related amendments) of the Act (Regulation 2). They do so in two stages:
– Regulation 2(1)(a) brings certain provisions of Section 20 and Schedule 5 into force on September 6, 2023, enabling the FCA to provide directions, guidance, and rules.
– Regulation 2(1)(b) brings these provisions into force for the FCA to receive applications during the application period (defined as the period from November 6, 2023 to February 6, 2024).
– Section 20 and Schedule 5 fully come into force, if not already in effect, on February 7, 2024.
(2) They outline transitional provisions for the commencement of above noted Section 20 and Schedule 5 (Regulation 3). In detail, they specify that certain amendments made during the application period do not apply to the approval of communication content by authorized persons who submitted applications under section 55NA(3)(a) of the Financial Services and Markets Act 2000 during this period. These provisions cease to have effect when the applications are determined or withdrawn, without affecting prior approvals.
(3) They provide transitional provisions for PRA rules, technical standards, and policies related to Basel international prudential standards (Regulation 4). Specifically, they disapply new requirements and procedural mechanisms introduced by the Act concerning prudential standards as long as they are covered by a consultation paper published by the PRA in November 2022, effective August 29, 2023.
(4) They provide transitional provisions for PRA rules that are not covered by Regulation 4, specifically CRR rules or rules under section 192XA of the 2000 Act that are not CRR rules. They disapply certain requirements that overlap with new accountability requirements introduced by the Act in Chapter 3 of Part 1, which come into force on 29th August 2023. Additionally, they adjust the accountability mechanism for rule-making instruments made under sections 192XA and 137G of the 2000 Act.
(5) They implement provisions dealing with the commencement of Section 61 of the Act, which amends section 187(2) of the 2000 Act related to control over authorized persons. This amendment allows regulators to impose conditions when approving applications for acquisitions by UK authorized (legal) persons. The regulations state that this amendment does not apply to applications received by the regulators before Section 61 commences on August 29, 2023 (legacy clause).