The U.K. Financial Conduct Authority has published its Rule Review Framework, setting out how it will set, measure and monitor the outcomes of its Handbook rules. The Rule Review Framework was mandated under the Financial Services and Markets Act 2023 (discussed in our client note, A Boost for UK Financial Services). The FSM Act 2023 transferred responsibility for making detailed rules to the U.K.'s regulators, significantly increasing their powers. To ensure proper oversight of the use of those powers, the FSM Act 2023 provides for an enhanced regulatory accountability framework, which includes requiring the FCA (and the Prudential Regulation Authority, which consulted on its proposed in 2023) to keep their rules under review and publish a statement of policy on how they conduct those reviews.
The final Framework largely reflects the FCA's Draft Framework upon which it consulted in 2023. The FCA will conduct three main types of review:
Following responses to its consultation, the FCA has committed to publishing an overview of its implementation of the Framework as part of its Annual Report. It has also acknowledged the potential burden on firms of providing data to support the reviews and has committed to proportionality when requesting data and maximizing the use of information it already holds. The FCA plans to prioritize rule reviews based on the scale and urgency of the potential harm to markets caused by the rule in question.
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