Financial Services Act 2021

Prudential regulation of credit institutions and investment firms

1Exclusion of certain investment firms from the Capital Requirements Regulation

2Prudential regulation of certain investment firms by FCA rules

3Transfer of certain prudential regulation matters into PRA rules

4CRR Basel standards

5Prudential regulation of credit institutions etc by PRA rules

6Power to amend the Credit Rating Agencies Regulation

7Amendments of the Capital Requirements Regulation

8Review of which benchmarks are critical benchmarks

9Mandatory administration of a critical benchmark

10Prohibition on new use where administrator to cease providing critical benchmark

11Assessment of representativeness of critical benchmarks

12Mandatory contribution to critical benchmarks

13Designation of certain critical benchmarks

14Use of Article 23A benchmarks

15Orderly cessation of Article 23A benchmarks

16Review of exercise of powers under Article 23D

17Policy statements relating to critical benchmarks

18Critical benchmarks provided for different currencies etc

19Changes to and cessation of a benchmark

20Extension of transitional period for benchmarks with non-UK administrators

21Benchmarks: minor and consequential amendments

Access to financial services markets

22Regulated activities and Gibraltar

23Power to make provision about Gibraltar

24Collective investment schemes authorised in approved countries

25Individually recognised overseas collective investment schemes

26Money market funds authorised in approved countries

27Provision of investment services etc in the UK

Variation or cancellation of permission to carry on regulated activity

28Part 4A permissions: variation or cancellation on initiative of FCA

Rules about level of care provided by authorised persons

29FCA rules about level of care provided to consumers by authorised persons

Insider dealing and money laundering etc

30Insider lists and managers' transactions

31Maximum sentences for insider dealing and financial services offences

32Money laundering offences: electronic money institutions, payment institutions and deposit-taking bodies

33Forfeiture of money: electronic money institutions and payment institutions

34Application of money laundering regulations to overseas trustees

Debt respite scheme

35Debt respite scheme

36Successor accounts for Help-to-Save savers

Miscellaneous

37Regulated activities and application of Consumer Credit Act 1974

38Amendments of the PRIIPs Regulation etc

39Retention of personal data under the Market Abuse Regulation

40Over the counter derivatives: clearing and procedures for reporting

41Regulations about financial collateral arrangements

42Appointment of chief executive of FCA

43Subordinate legislation made under retained direct EU legislation

44Payment services and the provision of cash

45Power to make consequential provision

47Interpretation

49Commencement and transitional provision

SCHEDULE 1Exclusion of certain investment firms from the Capital Requirements Regulation: consequential amendments

PART 1Amendments of the Capital Requirements Regulation

1The Capital Requirements Regulation is amended as follows.

2(1) Article 4(1) (definitions) is amended as follows.

3(1) Article 4A (definitions: regulators' rules) is amended as follows....

4For Article 4B substitute— Article 4B The consolidating supervisor The...

5Before Article 11 (and the Section and Chapter headings before...

6Omit Article 15 (derogation from the application of own funds...

7Omit Article 16 (derogation from the application of the leverage...

8Omit Article 17 (supervision of investment firms waived from the...

9In Article 47c(5) (deduction for non-performing exposures), omit “and the...

10In Article 49(6) (requirement for deduction where consolidation, supplementary supervision...

11(1) Article 81(1)(a) (minority interests that qualify for inclusion in...

12(1) Article 82(a) (Qualifying Additional Tier 1, Tier 1, Tier...

13(1) Article 84 (minority interests included in consolidated Common Equity...

14(1) Article 85 (qualifying Tier 1 instruments included in consolidated...

15(1) Article 87 (qualifying own funds included in consolidated own...

16In Article 93 (initial capital requirement on going concern)—

17Omit Article 95 (own funds requirements for investment firms with...

18Omit Article 96 (own funds requirements for IFPRU 730k firms)....

19Omit Article 97 (own funds based on fixed overheads).

20Omit Article 98 (own funds for investment firms on a...

21In Article 100 (additional reporting requirements), in the second subparagraph,...

22In Article 115(2) (exposures to regional governments or local authorities),...

23In Article 119 (exposures to institutions), after paragraph 5 insert—...

24(1) Article 136 (mapping of ECAI's credit assessments) is amended...

25In Article 162(3) (maturity), in the second subparagraph, in point...

26(1) Article 197 (eligibility of collateral under all approaches and...

27In Article 199(8) (additional eligibility for collateral under the IRB...

28In Article 200 (other funded credit protection), for point (c)...

29In Article 202 (eligibility of protection providers under the IRB...

30In Article 224(6) (supervisory volatility adjustment under Financial Collateral Comprehensive...

31In Article 227(3) (conditions for applying 0% volatility adjustment under...

32In Article 243(1) (criteria for STS securitisations qualifying for differentiated...

33(1) Article 270e (securitisation mapping) is amended as follows.

34In Article 290(3) (stress testing), for the words from “the...

35(1) Article 304(5) (treatment of clearing members' exposure to clients)...

36(1) Article 325u(5) (own funds requirements for residual risks) is...

37(1) Article 325az (alternative internal model approach and permission to...

38(1) Article 325bk(3) (calculation of stress scenario risk measure) is...

39In Article 382(4) (scope of own funds requirements for CVA...

40(1) Article 441(2) (indicators of global systemic importance) is amended...

41In Article 450(1)(d) (remuneration policy) omit “19A.3.44R to 44DR and”....

42In Article 456(1) (regulations modifying this Regulation) omit points (f)...

43(1) Article 464B (power to make technical standards) is amended...

44In Article 522(1)(b) (savings provisions: pre-exit decisions)—

45In Annex 1 (classification of off-balance sheet items), in point...

46(1) Annex 3 (items subject to supplementary reporting of liquid...

47In the following provisions, for “FCA and PRA may each”...

PART 2Amendments of the Capital Requirements (Country-by-Country Reporting) Regulations 2013

48The Capital Requirements (Country-by-Country Reporting) Regulations 2013 (S.I. 2013/3118) are...

49(1) Regulation 1(2) (interpretation) is amended as follows.

50In regulation 1, after paragraph (2) insert—

51In regulation 1(3) (interpretation of references to EU legislation), for...

52(1) Regulation 2 (ongoing reporting obligation) is amended as follows....

53In regulation 3(1) (interim reporting obligation), after “Institutions” insert “...

54(1) Regulation 4 (group disclosure) is amended as follows.

55(1) Regulation 5 (prior disclosure: prevention of duplication) is amended...

56In regulation 6(2) (enforcement)— (a) in sub-paragraph (a) omit “which...

SCHEDULE 2Prudential regulation of FCA investment firms

PART 1New Part 9C of the Financial Services and Markets Act 2000

1In the Financial Services and Markets Act 2000, after Part...

PART 2Minor and consequential amendments

2The Financial Services and Markets Act 2000 is amended as...

3In section 133(7A) (proceedings before the Tribunal: meaning of “disciplinary...

4In section 137A (the FCA's general rules), at the end...

5In section 165(7) (regulators' power to require information), after paragraph...

6(1) Section 166 (regulators' power to require reports by skilled...

7(1) Section 167 (regulators' power to appoint investigators) is amended...

8(1) In section 168(4), after paragraph (i) insert—

9(1) Section 176 (entry of premises under warrant) is amended...

10After section 177 insert— Interpretation Interpretation of Part 11 In this Part— “FCA investment firm” has the meaning given...

11In section 347(1)(g) (record of authorised persons etc), after “order”...

12In section 391(1ZB) (publication of warning notices), after paragraph (ia)...

13In section 392 (application of third party rights to notices)—...

14In section 395(13) (meaning of supervisory notice), after paragraph (bba)...

15(1) Section 417(1) (definitions) is amended as follows.

16In section 424A(1) (investment firm), after “this Act” insert “...

17(1) Section 429 (parliamentary control of statutory instruments) is amended...

18In paragraph 20(4) of Schedule 1ZA (enforcement costs), after paragraph...

PART 3Transitional provision

Rules made before Part 1 of this Schedule comes into force

19(1) The Financial Conduct Authority may identify general rules made...

Pre-commencement consultation etc

20(1) In relation to Part 9C rules, the requirements of...

Relevant equivalence decisions

21For the purposes of section 143G of the Financial Services...

Carbon target

22In relation to the making of Part 9C rules that...

Interpretation

23In this Part of this Schedule, “Part 9C rules” has...

SCHEDULE 3Prudential regulation of credit institutions etc

PART 1New Part 9D of the Financial Services and Markets Act 2000

1In the Financial Services and Markets Act 2000, after Part...

PART 2PRA's powers in relation to certain holding companies

2Part 12B of the Financial Services and Markets Act 2000...

3Before section 192O insert— “ Interpretation ”.

4(1) Section 192O(1) (interpretation) is amended as follows.

5Before section 192P insert— “ Approval ”.

6Omit section 192V (rules imposing consolidated or sub-consolidated requirements).

7After section 192X insert— Rules Rules applying to holding companies...

8In section 192Y(1) (power to impose penalty or issue censure),...

PART 3Minor and consequential amendments

Bank of England Act 1998 (c. 11)

9(1) Section 9H of the Bank of England Act 1998...

Financial Services and Markets Act 2000 (c. 8)

10The Financial Services and Markets Act 2000 is amended as...

11In section 137G (the PRA's general rules), at the end...

12In section 138J(10) (consultation by the PRA), for “section 138L”...

13In section 138K (consultation: mutual societies), at the end insert—...

14(1) Section 192O (interpretation of Part 12B) is amended as...

15In section 192R(3) (grant of approval)— (a) in paragraph (a)...

16(1) Section 192T (measures) is amended as follows.

17In section 192Y(1) (power to impose penalty or issue censure)—...

18In section 417(1) (definitions), at the appropriate place, insert— “CRR...

19In section 429(2) (parliamentary control of statutory instruments: affirmative procedure),...

Capital Requirements Regulations 2013 (S.I. 2013/3115)

20The Capital Requirements Regulations 2013 (meaning of “permission” etc) is...

21In regulation 2(1), in the definition of “appropriate regulator”, at...

22(1) Regulation 39 (meaning of “permission” etc) is amended as...

PART 4Transitional provision

Pre-commencement consultation etc

23(1) In relation to general rules that are CRR rules,...

Relevant equivalence decisions

24For the purposes of section 144C of the Financial Services...

Carbon target

25In relation to the making of CRR rules or section...

Section 192V rules

26(1) Rules made by the Prudential Regulation Authority under section...

Interpretation

27In this Part of this Schedule— “CRR rules” has the...

SCHEDULE 4Amendments of the Capital Requirements Regulation

1The Capital Requirements Regulation is amended as follows.

2In Article 4A(1)(a) (definitions: references to PRA rulebook), for “as...

3In Article 92(3) (own funds requirements), for points (b) and...

4In Article 107(3) (approaches to credit risk), for “third-country investment...

5In Article 144(1)(g) (competent authorities' assessment of an application to...

6In Article 201(1) (eligibility of protection providers under all approaches),...

7(1) Article 223 (Financial Collateral Comprehensive Method) is amended as...

8In Article 283 (permission to use the Internal Model Method),...

9For Article 298 substitute— Article 298 Effects of recognition of...

10In Article 299(2) (items in the trading book), omit point...

11In Article 384(1) (standardised method), in the definition of “EADitotal”—...

12(1) Article 500d (temporary calculation of exposure value of regular-way...

13(1) Annex 2 (types of derivatives) is amended as follows....

SCHEDULE 5Benchmarks: minor and consequential amendments

1The Benchmarks Regulation is amended as follows.

2(1) Article 3(1) (definitions) is amended as follows.

3In Article 3, after paragraph 1 insert— References in this Regulation to the capability of a benchmark...

4In Article 11 (input data), after paragraph 4 insert— In the case of a critical benchmark, paragraph 4 does...

5In Article A20(5)(b) (review of critical benchmarks), for “determines” substitute...

6(1) Article 20 (critical benchmarks: conditions and other matters) is...

7In Article 21(3) (mandatory administration of a critical benchmark), in...

8After Article 26 insert— CHAPTER 7 COMPLIANCE WITH REQUIREMENTS Article...

9In Article 29 (use of a benchmark), after paragraph 1...

10In Article 36(1) (register of administrators and benchmarks), after point...

11After Article 48 insert— TITLE 6A PROVISION OF INFORMATION AND...

SCHEDULE 6Gibraltar-based persons carrying on activities in the UK

After Schedule 2 to the Financial Services and Markets Act...

SCHEDULE 7UK-based persons carrying on activities in Gibraltar

After Schedule 2A to the Financial Services and Markets Act...

SCHEDULE 8Gibraltar: minor and consequential amendments

Financial Services and Markets Act 2000 (c. 8)

1The Financial Services and Markets Act 2000 is amended as...

2In section 3A(3)(a) (expressions in which general definition of “regulator”...

3In section 33(1)(a) (withdrawal of authorisation), after “permission” insert “...

4In Part 5 (performance of regulated activities), after section 71I...

5After section 137A insert— The FCA's general rules: Gibraltar (1) The FCA's general rules may not make provision prohibiting...

6After section 137G insert— The PRA's general rules: Gibraltar (1) The PRA's general rules may not make provision prohibiting...

7In section 213 (the compensation scheme), after subsection (9) insert—...

8In section 214 (provisions of the compensation scheme: general), before...

9In section 224 (scheme manager's power to inspect documents held...

10After section 367 insert— Winding-up petitions: Gibraltar-based persons (1) A regulator may not present a petition to the...

11(1) Section 392 (application of sections 393 and 394: warning...

12(1) Section 395 (the FCA's and PRA's procedures) is amended...

13Omit section 409 (Gibraltar).

14In section 417(1) (definitions), at the appropriate places insert— “Gibraltar-based...

15In section 418 (carrying on regulated activities in the United...

16(1) Section 429 (parliamentary control of statutory instruments) is amended...

17In paragraph 24 of Schedule 1ZA (services for which the...

18In paragraph 32 of Schedule 1ZB (services for which the...

Financial Services and Markets Act 2000 (Gibraltar) Order 2001 (S.I. 2001/3084)

19The Financial Services and Markets Act 2000 (Gibraltar) Order 2001...

Subsidy Control Act 2022

20(1) The Subsidy Control Act 2022 is amended as follows....

SCHEDULE 9Collective investment schemes authorised in approved countries

PART 1Provisions to be inserted in Chapter 5 of Part 17 of the Financial Services and Markets Act 2000

1In Chapter 5 of Part 17 of the Financial Services...

PART 2Minor and consequential amendments

Financial Services and Markets Act 2000 (c. 8)

2The Financial Services and Markets Act 2000 is amended as...

3In section 138I (consultation by the FCA), after subsection (9)...

4(1) Section 165 (regulators' powers to require information) is amended...

5In section 237(2) (Part 17 definitions), in the definition of...

6In section 392 (application of third party rights to notices)—...

7In section 395(13) (meaning of supervisory notice), before paragraph (f)...

8In section 429(2) (regulations subject to affirmative procedure), after “262,”...

The Alternative Investment Fund Managers Regulations 2013 (S.I. 2013/1773)

9Part 6 of the Alternative Investment Fund Managers Regulations 2013...

10In regulation 57 (marketing of third country AIFs by full-scope...

11In regulation 58(1) (marketing of AIFs managed by small third...

12In regulation 59 (marketing of AIFs managed by other third...

The Collective Investment Schemes (Amendment etc.) (EU Exit) Regulations 2019 (S.I. 2019/325)

13Part 6 of the Collective Investment Schemes (Amendment etc.) (EU...

14In regulation 62(3) (end of temporary recognition)—

15In regulation 67 (power to extend the period for temporary...

16After regulation 67 insert— Applications under section 271A of the...

SCHEDULE 10Amendments of the Markets in Financial Instruments Regulation

1The Markets in Financial Instruments Regulation is amended as follows....

2In Article 1 (subject matter and scope), after paragraph 4...

3In Article 2(1) (definitions), after point (61) insert—

Provision of services by third-country firms following equivalence determination

4In the heading of Title 8, for “DECISION” substitute “...

5(1) Article 46 (general provision about provision of services etc...

Equivalence determination

6(1) Article 47 (equivalence determination) is amended as follows.

7After Article 48 insert— Article 48A Requirements The Treasury may by regulations impose requirements on third-country firms...

Temporary prohibitions and restrictions and withdrawal of registration

8(1) Article 49 (withdrawal of registration) is amended as follows....

Temporary prohibitions and restrictions and withdrawal of registration: procedure

9After Article 49 insert— Article 49A Temporary prohibitions and restrictions:...

FCA directions and rules

10In the heading of Title 9, after “DIRECTIONS” insert “...

11In the heading of Article 50B (FCA Directions), at the...

12After that Article insert— Article 50C Other FCA directions A direction by the FCA under Article 46(4) may make...

13The requirements of section 138I of the Financial Services and...

Transitional provisions

14Omit Article 54 (transitional provisions).

SCHEDULE 11Variation or cancellation of Part 4A permission on initiative of FCA: additional power

1The Financial Services and Markets Act 2000 is amended as...

2After section 55J insert— Variation or cancellation on initiative of...

3After Schedule 6 insert— SCHEDULE 6A Variation or cancellation of...

4In section 133 (proceedings before Tribunal: general provision), after subsection...

5In section 392 (application of sections 393 and 394)—

SCHEDULE 12Forfeiture of money: electronic money institutions and payment institutions

Anti-terrorism, Crime and Security Act 2001 (c. 24)

1Schedule 1 to the Anti-terrorism, Crime and Security Act 2001...

2Part 4B (forfeiture of terrorist money held in bank and...

3In the Part heading, for “bank and building society” substitute...

4(1) Paragraph 10Q (application for account freezing order) is amended...

5In paragraph 10V(1) (restriction on proceedings and remedies), for “bank...

6In paragraph 10W(6)(b) (account forfeiture notice), for “bank or building...

7(1) Paragraph 10Y (lapse of account forfeiture notice) is amended...

8In paragraph 10Z2(7)(a) (forfeiture order), for “bank or building society”...

9In Part 6 (interpretation), in paragraph 19(1), at the appropriate...

Proceeds of Crime Act 2002 (c. 29)

10Part 5 of the Proceeds of Crime Act 2002 (civil...

11Chapter 3B (forfeiture of money held in bank and building...

12In the Chapter heading, for “bank and building society” substitute...

13In the italic heading before section 303Z1, for “bank and...

14(1) Section 303Z1 (application for account freezing order) is amended...

15In section 303Z2(3) (restrictions on making of application under section...

16In section 303Z6(1), for “bank or building society” substitute “...

17In section 303Z8(4), for “bank or building society” substitute “...

18In section 303Z9(6)(b) (account forfeiture notice: England and Wales and...

19(1) Section 303Z11 (lapse of account forfeiture notice) is amended...

20In section 303Z14(7)(a) (forfeiture order), for “bank or building society”...

21In section 316(1) (general interpretation of Part 5), at the...

Royal arms

Financial Services Act 2021

2021 CHAPTER 22

An Act to make provision about financial services and markets; to make provision about debt respite schemes; to make provision about Help-to-Save accounts; and for connected purposes.

[29th April 2021]

Be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—