Chancellor to scrap PRIIPs rules among 30 reforms

Chancellor Jeremy Hunt has today announced what he’s called the ‘Edinburgh Reforms’ – major plans to shake up financial services to improve competition and growth post-Brexit.

Mr Hunt wants 30 reforms of financial regulation to make financial services one of the UK’s five key growth sectors.

He is planning a sweeping series of reforms to make the UK, “the world’s most innovative and competitive global financial centre.”

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He has written to Parliament, the FCA and other regulators and bodies today to outline his plans.

Among the key reforms are:

Repealing the Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulation, and consulting on a new direction for retail disclosure
Issuing new remit letters for the PRA and FCA with clear, targeted recommendations on growth and international competitiveness
Publishing a plan for repealing and reforming EU law using powers within the Financial Services and Markets to build a ‘smarter regulatory framework’ for the UK
Commencing a review into reforming the Senior Managers & Certification Regime in Q1 2023
From April 2023, improving the tax rules for Real Estate Investment Trusts
Consulting on reform to the VAT treatment of fund management

In a written statement to Parliament today, the Chancellor has outlined a sweeping series of reforms for the UK financial sector (see below for links).

He says the government’s approach to reforming the financial services regulatory landscape, “recognises and protects the foundations on which the UK’s success as a financial services hub is built: agility, consistently high regulatory standards, and openness.”

Mr Hunt says he wants to see the financial services sector benefit from “dynamic, proportionate regulation” and that consumers and citizens benefit from high quality services, “appropriate consumer protection” and from a sector that embraces the latest technology.

The full list of measures announced is as follows:

A competitive marketplace promoting effective use of capital

The government is taking action to “maintain and build” the UK’s attractive and internationally respected ecosystem for financial services regulation. Taking advantage of the UK’s position outside the EU, the government is setting out how the framework for financial services regulation will adapt to support a dynamic, stable and competitive financial services sector. To take this forward, the government is:

Reforming the Ring-Fencing Regime for Banks
Issuing new remit letters for the PRA and FCA with clear, targeted recommendations on growth and international competitiveness
Publishing the plan for repealing and reforming EU law using powers within the FSM Bill, building a smarter regulatory framework for the UK
Overhauling the UK’s regulation of prospectuses
Reforming the Securitisation Regulation
Repealing the Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulation, and consulting on a new direction for retail disclosure
Intending to repeal EU legislation on the European Long-Term Investment Fund (ELTIF), reflecting that the new UK Long-Term Asset Fund (LTAF) provides a better fund structure for the UK market
Launching a Call for Evidence on reforming the Short Selling Regulation
Publishing a draft Statutory Instrument to demonstrate how the new powers being taken forward in the FSM Bill will be used to ensure that the FCA has sufficient rulemaking powers over its retained EU payments legislation
Consulting on removing burdensome customer information requirements set out in the Payment Accounts Regulations 2015
Welcoming the PRA consultation on removing rules for the capital deduction of certain non-performing exposures held by banks
Bringing forward secondary legislation to implement Wholesale Markets Review reforms
Establishing an Accelerated Settlement Taskforce
Committing to establish the independent Investment Research Review
Commencing a review into reforming the Senior Managers & Certification Regime in Q1 2023
Committing to having a regime for a UK consolidated tape in place by 2024
Consulting on issuing new guidance on Local Government Pension Scheme asset pooling
Increasing the pace of consolidation in Defined Contribution pension schemes
From April 2023, improving the tax rules for Real Estate Investment Trusts
Announcing changes to the Building Societies Act 1986
Delivering the outcomes of the Secondary Capital Raising Review
Consulting on reform to the VAT treatment of fund management

The government also wants to secure the UK as the best place in the world for responsible and sustainable investment. To achieve this steps being announced today are:

Publishing an updated Green Finance Strategy in early 2023
Consulting in Q1 2023 on bringing Environmental, Social, and Governance ratings providers into the regulatory perimeter

A sector at the forefront of technology and innovation

The government is ensuring that the regulatory framework supports innovation and leadership in emerging areas of finance, facilitating the adoption of cutting-edge technologies. The measures below build on the FSM Bill, which will establish a safe regulatory environment for stablecoins – which may be used for payments – and ensure the government has the necessary powers to bring a broader range of investment-related cryptoasset activities into UK regulation. The government is:

Consulting on a UK retail central bank digital currency alongside the Bank of England in the coming weeks
Publishing a response to the consultation on expanding the Investment Manager Exemption to include cryptoassets
Implementing a Financial Market Infrastructure Sandbox in 2023.
Working with the regulators and market participants to trial a new class of wholesale market venue which would operate on an intermittent trading basis.

Delivering for consumers & businesses

The government will continue to work with the regulators and industry to ensure the sector is delivering for people and businesses across the UK. The government is:

Consulting on Consumer Credit Act Reform
Laying regulations in early 2023 to remove well-designed performance fees from the pensions regulatory charge cap
Committing to work with the FCA to examine the boundary between regulated financial advice and financial guidance

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