In June 2023, the Financial Services and Markets Act 2023 (Act) received Royal Assent.
The Act allows the UK to take control of the financial services rulebook, to support UK businesses and create a more dynamic and competitive financial services environment.
The Act makes significant reforms to the regulation of the UK financial sector and contains measures to, among other things:
- Establish a framework for the revocation (cancellation) of financial services retained EU law; a process which it is anticipated will take a number of years to complete.
- Reform the legislative framework governing the UK’s capital markets.
- Establish a regulatory gateway that authorised firms must pass through prior to being able to approve the financial promotions of unauthorised firms.
- Bring activities facilitating the use of certain stablecoins (cryptocurrencies the value of which is pegged to a ‘stable’ asset, designed to reduce volatility) used as a means of payment, into the UK regulatory regime and give HM Treasury the power to establish an authorisation and supervision regime.
- Ensure that mutual recognition agreements related to financial services will provide recognition of:
- The UK’s rules and practices in other jurisdictions; and
- Other jurisdictions’ rules and practices in the UK.
- Grant the Financial Conduct Authority and the Prudential Regulation Authority, a new secondary objective to advance long-term UK economic growth and international competitiveness.
- Establish a framework to protect easy access to cash. There has been a decline in the use of cash in the UK in recent years leading to the closure of bank and building society branches. The Act will protect easy access to cash and maintain an appropriate network of cash facilities.
- Introduce new regimes for insurers in financial difficulties, to expand the protections available to an insurer undergoing insolvency and its policyholders.
- Ensure that a politically exposed person (PEP) entrusted to perform a prominent public function by the UK (or their family members or known close associates), is treated as representing a lower risk than a PEP from a country other than the UK, with reduced due diligence measures applied to them.
We will follow the developments of the Act as they progress and provide an update when available.
Current legislation dictates that you must not carry on a regulated activity in the UK unless you are authorised to do so by the Financial Services Authority or unless you are an exempt person. This is known as the general prohibition under the Financial Services and Markets Act 2000 (FSMA).
If the FSMA affects your business activities or if you have any questions in relation to the above, please get in touch with Aselle Djumabaeva-Wood.