UK Prudential Regulator Granted Power to Disapply Rules

On April 18, 2024, the Financial Services and Markets Act 2000 (Disapplication or Modification of Financial Regulator Rules in Individual Cases) Regulations 2024 were made. The Financial Services and Markets Act of 2023 (discussed in our client note, "A Boost for UK Financial Services") provides a framework for the revocation of retained EU law (now known as "assimilated law") in financial services, much of which will be replaced by rules of the U.K. regulators. Transferring the detailed rules to the U.K. regulator's rulebooks promotes a more nimble approach by the U.K.'s regulators. The FSM Act 2023 gave new delegated power to the U.K.'s regulators for detailed rulemaking, subject to enhanced oversight by Parliament and HM Treasury, and provided various mechanisms for the operation of the regulatory framework, including granting HM Treasury the power to make regulations bestowing on each of the regulators the ability to disapply or modify its rules.

The Regulations also give the Prudential Regulation Authority the ability to disapply or modify the application of any of its rules made under the Financial Services and Markets Act 2000, where appropriate, and in accordance with the procedural requirements set out in the Regulations. The power will allow the PRA to consider the circumstances and business models of individual firms, further enhancing the agile approach to regulation. The Regulations enter into force on June 30, 2024.