Draft Financial Services (Miscellaneous) (Amendment) (EU Exit) Regulations 2019

Secondly, the SI makes minor technical amendments to 12 other financial services EU exit instruments that have been previously debated by the House. A number of the amendments are being made in this instrument because they are consequential on other instruments that have only recently been made, such as the Equivalence Determinations for Financial Services and Miscellaneous Provisions (Amendment etc) (EU Exit) Regulations 2019. A minority of the amendments correct drafting errors and improve the clarity of drafting. For example, a duplicate provision is omitted from the Bank of England (Amendment) (EU Exit) Regulations 2018, as the same amendment is made by the Deposit Guarantee Scheme and Miscellaneous Provisions (Amendment) (EU Exit) Regulations 2018.

At this point, it would be appropriate for me to acknowledge the enormous amount of work done by my colleagues in the Treasury to minimise the number of amendments that have been necessary. We are talking about 10 or 12 in 1,000 pages of SIs.

Thirdly, the SI revokes three UK statutory instruments that relate to EU regimes that will not be applicable to the UK in the event of a no-deal exit, given that they implement EU law that is being revoked at exit day under separate instruments.

Fourthly, the SI makes amendments to or revokes retained EU law to ensure consistency with other EU exit instruments that have been made and to remove references to EU institutions that will no longer be relevant post-exit. For example, part of regulation 33 revokes EU regulations providing for functions and administration of the European Central Bank.

Finally, the SI makes transitional and saving provisions to address deficiencies that arise from the UK’s withdrawal from the EU and to limit disruption to the financial services industry if the UK leaves without a deal. For example, a minor change is made to article 7 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, which excludes deposits held in lawyers’ client accounts from being regulated under financial services law, as they are already regulated by the Law Society. European-registered lawyers are currently included in the exemption, and the SI ensures that the exemption will continue for a limited period after Brexit. A transitional regime is also made for group supervision under the Solvency 2 and Insurance (Amendment, etc.) (EU Exit) Regulations 2019, so that where a group is supervised by an EEA supervisor, the relevant provisions that impose requirements on the Prudential Regulation Authority as a group supervisor do not apply for a period of two years after exit day.

The Treasury has worked closely with the financial services regulators in the drafting of the EU exit instruments amended by the instrument. We have also engaged extensively with the financial services industry on the instruments to which the SI relates. In summary, the Government believe that the proposed legislation is necessary to ensure that the UK has a coherent and functioning financial services regulatory regime once it leaves the EU, and that the legislation will continue to function appropriately if it leaves the EU without a deal or an implementation period. I hope hon. Members will join me in supporting the regulations, which I commend to the Committee.

Surprisingly, I note from the explanatory memorandum that the SI was originally tabled as a negative instrument. That decision was subsequently declined by the European Statutory Instruments Committee, or sifting Committee, hence our debate under the affirmative procedure today. I am minded to vote against it for that reason, on principle, but if the Minister agrees, a better way forward might be for him to write to me to set out, in his view, the balance between the drafting errors and the technical amendments contained in the instrument, and to place a copy in the Library so there will be complete transparency for all hon. Members as to exactly what it contains and relates to.