UK lays draft SI for overseas prudential requirements regime

The draft Overseas Prudential Requirements Regime (Credit Institutions and Investment Firms) Regulations 2026 were published, accompanied by a draft explanatory memorandum. The Regulations support the transition to the FSMA 2000 model of regulation, under which detailed prudential requirements are set by the UK Prudential Regulation Authority within a framework established by government and Parliament. This transition entails the revocation of provisions of the UK Capital Requirements Regulation (UK CRR) and restatements, as needed, in UK legislation to facilitate the FSMA model, with UK CRR provisions replaced with regulator rules, supervisory statements and statements of policy.

The Regulations restate existing UK CRR equivalence provisions in legislation to create a single overseas prudential requirements regime (OPRR), preserving the scope and effect of the current prudential equivalence framework and treating existing equivalence decisions as designations under the new regime. The OPRR enables HM Treasury to designate overseas jurisdictions for specified prudential purposes, with future designations requiring a further statutory instrument and parliamentary approval. In particular, the Regulations provide a framework for designation in the context of: (i) exposures to overseas credit institutions, investment firms and exchanges; (ii) overseas eligible covered bonds; (iii) exposures to overseas central banks, regional governments, local authorities and public sector entities (with specific provision made for those in Gibraltar); and (iv) issuance of capital by overseas intermediate financial holding companies.

The Regulations are expected to enter into force on 1 January 2027.

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