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FCA update – go-live deadline for CRDV and BRRDII – the UK’s prudential regime

FCA update – go-live deadline for CRDV and BRRDII – the UK’s prudential regime

Background

  • The EU is implementing many Basel III standards, and other prudential regulations, via CRR2, which applies in the EU from June 2021. The UK therefore intends to update the prudential regime for UK credit institutions.
  • The methods and approaches for implementation in the UK will be impacted by changes linked to the UK’s departure from the EU expected on 31 December 2020.
  • Changes and plans are expected to be included in a Financial Services Bill during 2020 but some actions have been delayed by responses to the Covid-19 pandemic.

Impacts

CRR2 and CRDV amend the Capital Requirements Regulation (CRR) and Capital Requirements Directive (CRDIV), which provide the legal architecture for the prudential regulation of banks in the EU.

Many of the changes made by CRR2 and CRDV continue the EU’s implementation of internationally agreed Basel standards. However, the EU’s implementation deviates from Basel standards in a few areas.

The revised rules on capital and liquidity (CRR2 and CRDV) and resolution (BRRD2 and SRMR2) were published in the Official Journal on 7 June 2019 following a legislative process which began at the end of 2016. Most changes will start to apply from mid-2021. Some will apply sooner.

  • Transposition of Capital Requirements Directive V (CRDV)

Transposition of the EU Capital Requirements Directive V (CRDV), which sets out the architecture for the prudential regulation of credit institutions.

  • Transposition of Bank Recovery and Resolution Directive II (BRRD II)

Transposition of EU Bank Recovery and Resolution Directive II, which updates the bank resolution regime across the EU.

Transposing of all SIs was intended for Q2 and Q3 2020 but some actions and deadlines have been negatively impacted by reactions to the Covid-19 pandemic.

Timeline with relevant dates to be logged on regulatory calendar

  • 31 October 2020: Planned Statutory Instrument laying date for CRDV
  • 28 December 2020: transposition deadline for BRRD11
  • 29 December 2020: Firm compliance expected with CRDV

Next steps

Detailed information is available on the FCA website for all these regulatory changes and initiatives.

For any further queries or to discuss further, the FCA Supervision Hub on 0300 500 0597 is the primary contact for a firm’s day-to-day interactions with the FCA.

Click here if you would like to get in touch with us.