Legislation – Financial Services and Markets Act 2023

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PART 1Regulatory framework

CHAPTER 3Accountability of regulators

FCA and PRA powers to make rules etc

31Matters to consider when making rules

(1)

FSMA 2000 is amended as follows.

(2)

Before section 138F (under the italic heading “Procedural provisions”) insert—

“138EAMatters to consider when making rules

(1)

This section applies where either regulator proposes to make rules.

(2)

The regulator must have regard to any specified matters that are relevant to the making of the rules in question.

(3)

“Specified” means specified in regulations made by the Treasury for the purposes of this section.

(4)

The specification of a matter for the purposes of this section may apply generally to the making of rules or be limited in whatever way the Treasury consider appropriate, including by reference to—

(a)

the power under which the rules are made;

(b)

the persons to whom the rules apply;

(c)

the activities or subject-matter to which the rules relate.

(5)

The requirement imposed by subsection (2) does not apply in respect of any rules if, or to the extent that, the rules are made for the purposes of—

(a)

complying with a direction given by the Financial Policy Committee of the Bank of England under section 9H of the Bank of England Act 1998 (directions requiring macro-prudential measures), or

(b)

acting in accordance with a recommendation made by that Committee under section 9Q of that Act (recommendations about the exercise of the FCA and PRA functions).

(6)

The requirement to have regard to specified matters under this section when making rules is in addition to any other requirements to have regard to matters when making such rules imposed by another provision of this Act or by any other enactment.”

(3)

In section 138I (consultation by the FCA)—

(a)

in subsection (2) after paragraph (b) insert—

“(ba)

an explanation of the ways in which having regard to specified matters under section 138EA(2) has affected the proposed rules,”;

(b)

after subsection (8) insert—

“(8A)

The requirement to provide the explanation referred to in subsection (2)(ba) does not apply in relation to any rules if—

(a)

the FCA considers that the delay involved in complying with that requirement would be prejudicial to the interests of consumers (as defined in section 425A) or other persons whose interests would be protected by the rules, or

(b)

the rules change existing rules and the changes consist of, or include, changes which, in the FCA’s opinion, are not material.

(8B)

Where an explanation is not provided by virtue of subsection (8A)(b), the draft of the rules must be accompanied by a statement of the FCA’s opinion.”

(4)

In section 138J (consultation by the PRA)—

(a)

in subsection (2) after paragraph (b) insert—

“(ba)

an explanation of the ways in which having regard to specified matters under section 138EA(2) has affected the proposed rules,”;

(b)

after subsection (8) insert—

“(8A)

The requirement to provide the explanation referred to in subsection (2)(ba) does not apply in relation to any rules if—

(a)

the PRA considers that the delay involved in complying with that requirement would—

(i)

be prejudicial to the safety and soundness of PRA-authorised persons, or

(ii)

in a case where section 2C applies, be prejudicial to securing the appropriate degree of protection for policyholders, or

(b)

the rules change existing rules and the changes consist of, or include, changes which, in the PRA’s opinion, are not material.

(8B)

Where an explanation is not provided by virtue of subsection (8A)(b), the draft of the rules must be accompanied by a statement of the PRA’s opinion.”

(5)

In section 429 (Parliamentary procedure for statutory instruments), in subsection (2), in the list of sections beginning with “90B” insert at the appropriate place “138EA(3),”.