Context
The FCA has published a web page outlining its approach to the repeal and replacement, under the Financial Services and Markets Act 2023, of retained EU law with its rules, including commentary on key documents, next steps and the core principles for managing this work.
Key points to note
- The Treasury will repeal the firm-facing requirements in retained EU law (REUL), and we will replace those provisions, where appropriate, with handbook rules.
- There is a significant amount of REUL, and the repeal and replacement work will have an impact on the Handbook.
- In relation to insurance, the FCA aims to publish a Consultation Paper in Q4 2023 to repeal and replace of the Insurance Distribution Directive (IDD). Many of the IDD’s requirements are already in the Handbook, but the FCA is working with the Treasury to complete the replacement of REUL.
- The FCA’s principles for replacing retained EU law in the Handbook are:
- consolidate requirements as far as possible so that, over time, the FCA Handbook becomes the ‘one stop shop’ for firm-facing regulatory requirements;
- use the current Handbook structure, only creating new sourcebooks where necessary;
- rely on existing requirements in the Handbook, where relevant, and consider if it is necessary to reflect the repealed REUL provision in the Handbook
- rely on outcomes rather than prescriptive requirements, where appropriate; and
- reduce complexity, both in drafting style and by seeking to align standards across sectors, where appropriate.
Next actions
This is an important piece of work. As such, we recommend that firms read the web page to understand the FCA’s and HM Treasury’s approach.