Mansion House: UK government publishes draft Overseas Recognition Regimes Regulations and Guidance

Alongside its Financial Services Growth and Competitiveness Strategy, the UK government has laid before Parliament, a draft of the Financial Services (Overseas Recognition Regime Designations) Regulations 2025 (the ORR Regulations) alongside an explanatory memorandum, and published Overseas Recognition Regimes Guidance (the ORR Guidance). The ORR is the UK's regime for providing "recognition" of a regulatory regime in an overseas jurisdiction, allowing cross-border financial services into the UK. It is similar to the EU's equivalence and the U.S.'s comparability regimes.

The ORR Regulations, which are intended to take effect on 28 November, bring together in a comprehensive regime the existing ORRs under the Short Selling Regulations 2025 and the Insurance and Reinsurance Undertakings (Prudential Requirements) Regulations 2023 and the equivalence decisions that were inherited when the UK left the EU.

A table of UK equivalence decisions and overseas recognition regime designations has also been published. The ORR Regulations will replace and restate in part the Equivalence Determinations for Financial Services and Miscellaneous Provisions (Amendment etc) (EU Exit) Regulations 2019 which provided HM Treasury (HMT) with a temporary power to make equivalence and exemptions directions for the EU and EEA Member States under relevant financial services legislation. The ORR guidance confirms that EU equivalence decisions that were onshored for the purposes of Brexit will be replaced with designations under the ORRs, amended where appropriate for the UK's needs and reflecting the UK's outcomes-based approach to recognition.

The ORR Regulations set out the powers and obligations of HMT as regards ORR designations, including the power to request information and advice from the financial services regulators and the power to impose conditions when making an ORR designation or revoke a designation. The ORR Guidance further describes the principles and processes that will apply to the ORR regime. HMT, the Bank of England, the UK Prudential Regulation Authority and the UK Financial Conduct Authority have entered into a Memorandum of Understanding regarding how they intend to coordinate under the ORRs.

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