Post-Brexit Momentum: Financial Services and Markets Bill Receives Royal Assent

As a major post-Brexit milestone, HM Treasury (“HMT”) has announced that the Financial Services and Markets Bill received Royal Assent on 29 June 2023 (HMT’s press release is available here). For more information on the development of the Financial Services and Markets Bill and the Katten team’s recent webinar discussions on whether the landmark legislation is the start of a “Big Bang 2.0” for the UK’s financial sector please see here.

The Financial Services and Markets Act 2023 (“Act”) establishes the UK’s post-Brexit financial services framework, tailoring regulation to fit the UK’s market to secure the UK’s leading global position in financial services. Growing the UK economy and creating an open, sustainable and technologically-advanced financial services sector is fundamental to HMT’s vision. The Act aims to improve the UK’s competitiveness as a global financial centre, delivering better outcomes for consumers and businesses.

The Act will, among other things:

• introduce secondary objectives for the Financial Conduct Authority and the Prudential Regulation Authority (together, the “Regulators”) to facilitate the growth and international competitiveness of the UK economy;
• enhance the scrutiny of the Regulators to ensure clear accountability, appropriate democratic input and transparent oversight;
• create the “designated activities regime” whereby activities and products regulated by retained EU law can be supervised by the Regulators without giving rise to authorisation requirements;
• introduce new rules for “critical third parties” under which the largest providers of critical services to regulated firms will themselves be subject to regulatory supervision;
• tighten controls on those who approve financial promotions for others;
• remove unnecessary restrictions on wholesale markets by implementing the key outcomes of the Wholesale Markets Review;
• enable the regulation of cryptoassets to support their adoption in the UK; and
• establish “sandboxes” to facilitate the use of new technologies (such as blockchain) in financial markets.

The highly anticipated Act paves the way for the UK to create a more competitive financial services sector, while maintaining high regulatory standards bespoke to the UK’s needs in the post-Brexit world. The Act, while clearly an important piece of legislation, has previously been regarded by the UK financial services sector with cautious optimism. 

Although HMT described the step as a “rocket boost for UK economy”, whether the Act will enable the UK’s financial services sector to soar to new heights remains to be seen.