Repealing and replacing retained EU law in the UK - new FCA webpage

On 14 July 2023, the FCA published a new webpage that provides information on the repeal and replacement of retained EU law (REUL) with FCA rules.

HM Treasury (HMT) plans to repeal firm-facing requirements contained in REUL and, where necessary, the FCA will replace repealed provisions with its own rules. This ties in with HMT's Plan for Delivery setting out its approach for building a Smarter Regulatory Framework for financial services, tailored to the UK (on which we reported here).

Repealing and replacing a significant bulk of REUL will have an impact on the FCA Handbook. However, when replacing repealed REUL provisions in its Handbook, the FCA intends to do so in line with five core principles that it sets out on the webpage.

What are the five core principles?

These are:

• consolidate requirements as far as possible so that, over time, the FCA Handbook becomes the 'one stop shop' for firm-facing regulatory requirements;
• use the current Handbook structure, only creating new sourcebooks where necessary;
• rely on existing requirements in our Handbook, where relevant, and consider if it is necessary to reflect the repealed REUL provision in our Handbook;
• rely on outcomes rather than prescriptive requirements, where appropriate; and
• reduce complexity, both in drafting style and by seeking to align standards across sectors, where appropriate.

The principles aim to support the FCA's overarching aim of making the Handbook clear, accessible and navigable, while reducing regulatory costs. The FCA notes that, in some cases, it may need to take a different approach in the short term, such as replacing REUL to address an emerging harm, or to manage the overall pace of the process.

What's being repealed and replaced?

The following documents are in the pipeline to be repealed and replaced:

• PRIIPs Regulation - no timeframe is given for the consultation.
• European Long-Term Investment Fund Regulation (ELTIF) - the FCA will update and amend the Handbook once the repealing legislation comes into effect. The ELTIF will not be replaced, because no ELTIFs have been established in the UK, and the new UK Long-Term Asset Fund (LTAF) regime provides an alternative fund structure better suited to the needs of the UK market.
• MiFID II Directive, the Markets in Financial Instruments Regulation (MiFIR), and the Wholesale Markets Review reforms - the FCA intends to publish further consultation papers on commodities derivatives and transparency reforms in Q4 2023.
• Money Market Funds Regulation (MMF Regulation) - the FCA intends to publish a consultation paper in Q4 2023.
• Short-Selling Regulation (SSR) - the FCA intends to publish a consultation paper in 2024.
• Insurance Distribution Directive - the FCA intends to publish a consultation paper in Q4 2023.
• Payment Accounts Regulations 2015 (PARs) - this is being repealed and will not be replaced with FCA rules.
• Revised Payment Services Directive (PSD2) and Electronic Money Directive (EMD) and Regulations -  no timeframe is given for the consultation.