Draft FSMA 2023 (Prudential Regulation of Credit Institutions) (Consequential Amendments) Regulations published

A draft of the Financial Services and Markets Act 2023 (Prudential Regulation of Credit Institutions) (Consequential Amendments) Regulations 2025 has been laid before the UK Parliament, and published together with a draft explanatory memorandum. The draft regulations are part of the UK's continued process to repeal and replace assimilated EU financial services law following Brexit, under the Financial Services and Markets Act 2023 (FSMA 2023). Under section 1 of FSMA 2023, several provisions of the UK Capital Requirements Regulation (UK CRR) will be revoked, effective from 1 January 2026, by virtue of the FSMA 2023 (Commencement No. 10 and Saving Provisions) Regulations 2025. These provisions, which set prudential standards for credit institutions and investment firms, will largely be replaced by rules made by the UK Prudential Regulation Authority (PRA) and the Bank of England.

These draft regulations make consequential technical amendments to UK legislation to ensure legal coherence where UK CRR provisions are being revoked and restated. In practice, references to revoked UK CRR provisions will be read as references to the corresponding PRA rules. Therefore, amendments are made only where no corresponding PRA rule exists, helping to avoid gaps in the legal framework. These technical amendments apply to certain sections of the Banking Act 2009, the Bank Recovery and Resolution (No 2) Order 2014, the Financial Conglomerates and Other Financial Groups (Amendment etc.) (EU Exit) Regulations 2019, and the Bank Levy (Loss Absorbing Instruments) Regulations 2020. The draft Regulations are expected to enter into force on 1 January 2026.

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