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  • HM Treasury Consults on UK Implementation of CRD V

    HM Treasury has launched a consultation on the U.K.'s implementation of the EU amendments to the Capital Requirements Directive that were published in June 2019 (known as CRD V). EU Member States are required to implement the CRD V changes into their national regimes by December 28, 2020. As this is prior to the end of the U.K.'s Brexit transition period, the U.K must transpose those provisions of CRD V that are applicable before the end of the transition period into U.K. law under the terms of the EU-U.K. Withdrawal Agreement. HM Treasury's consultation relates only to those aspects of CRD V that must be implemented via legislation. The rest of CRD V will be implemented by the U.K. Prudential Regulation Authority through updates to the PRA rules. Responses to HM Treasury's consultation should be submitted by August 19, 2020.
    The issues on which HM Treasury is consulting include:
    • HM Treasury's proposal not to apply any CRD V changes to FCA-regulated investment firms, which should instead be governed by the U.K. government's proposed Investment Firms Prudential Regime (which is expected to be introduced by summer 2021 and will aim to achieve the same outcomes as the EU's Investment Firms Regulation and Directive);
    • Updates to the capital buffers that the PRA can require of financial institutions to preserve macro-prudential flexibility for the Financial Policy Committee and the PRA;
    • Creation of a new approval regime for financial holding companies and mixed financial holding companies, including granting the PRA an express power to remove members of the management body of institutions and holding companies;
    • Amendments to the list of entities exempted from CRD V – in the U.K., this will be National Savings & Investments, CDC Group Plc, the Agricultural Mortgage Corporation Ltd, the Crown Agents for overseas governments and administrations, credit unions and municipal banks, as well as various EU entities; and
    • The equal pay framework – HM Treasury considers that the U.K.'s existing equality regime (under the Equality Act 2010 and Equality Act 2010 (Gender Pay Gap Information) Regulations 2017) satisfies gender neutral remuneration requirements under CRD V, so does not plan to make any changes to implement this aspect of the Directive.
    View HM Treasury's consultation on the implementation of CRD V.
    View details of CRD V.
    View details of the EU's Investment Firms Regulation and Directive.
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