Responses to CP18/17 Occasional Consultation Paper - Chapters 7 and 8

Policy Statement 31/17

Published on 29 June 2018

Update 24 August 2018: The next steps section below has been updated to reflect that the European Commission has delayed the application date of the IDD to 1 October 2018.

Update 29 June 2018: The legislative framework for the PRA to implement EU Benchmark Regulations is now in place. As a result this PS has been updated to include the EU Benchmarking Regulations Instrument 2018 (see Appendix 8).

Update 11 May 2018: The PRA has updated this PS (as proposed in paragraph 1.2) to include the reference to the final MiFID II Passporting Implementing Technical Standard which was published in the Official Journal of the European Union on 20 December 2017. This instrument has an effective date of 5 February 2018. There is no change in policy.

Update 22 February 2018: This policy statement (PS) was updated following CP4/18 ‘Insurance Distribution Directive: change to commencement date’. For more details see ‘Next steps’ below.

Update 21 December 2017: This PS was updated to include the MiFID II Passporting Instrument 2007 on 21 December 2017. Firms wishing to passport under MiFID II should notify the PRA by using the relevant form in Commission Implementing Regulation (EU) 2017/2382 of 14 December 2017 laying down implementing technical standards with regard to standard forms, templates and procedures for the transmission of information in accordance with Directive 2014/65/EU of the European Parliament and of the Council. The PS is near final and will be updated in due course to include the reference to this Regulation.

Published 15 December 2017

This Prudential Regulation Authority (PRA) policy statement (PS) provides final policy as part of changes to the PRA Rulebook as outlined in Chapter 7 of Occasional Consultation Paper (CP) 18/17. These changes relate to the second Markets in Financial Instruments Directive (MiFID II), Insurance Distribution Directive (IDD) forms, and European Union Benchmarks Regulation (BMR). This PS also includes a consequential amendment to Short Form A, as outlined in Chapter 8 of CP18/17.

This PS provides the majority of final rules and form changes associated with MiFID II and IDD. It will be updated to include the MiFID II Passporting Amendment Instrument (without reference to the relevant implementing technical standard) which includes consequential IDD-related changes to the Branch Notification and Cross Border Services Notification forms. Following publication of the relevant technical standard in the Official Journal of the European Union, we will update this PS with a further MiFID II Passporting Instrument, referencing the technical standard.

Following completion of the relevant legislative procedure by Parliament, this PS will also be updated to include the final BMR instrument and associated form changes.

This PS is relevant to:

MiFID II: PRA designated investment firms and Financial Conduct Authority (FCA) regulated MiFID firms, all PRA regulated firms and all common platform firms;
IDD: UK Relevant Authorised Persons (RAPs), third-country RAPs, Solvency II firms, small non-directive insurers and large non-directive insurers, as well as all firms completing the Authorisation form for banks, the supplements for insurance companies and Lloyd’s managing partners, the controller appendices for corporates and partnerships, the owners and influencers appendix, and the waiver application form;
Consequential Amendments to Short Form A: Banks, building societies, credit unions, PRA designated investment firms, RAPs and third-country branches; and
BMR: All firms completing the Senior Management Regime: Statements of Responsibilities form.

Next steps

Updates to this PS, as outlined in paragraphs 1.3 to 1.5 of this PS, will be made accordingly. Firms should check the PS31/17 landing page on the PRA website for further updates and the PRA will communicate updates to firms as appropriate.

BMR will apply from 1 January 2018. We consulted on this in CP17/18. We have not yet published final rules, as the legislative framework for our Rulebook changes is not yet in place. Once the necessary legislative processes are complete, we intend to make these as final rules, and update this PS. MiFID II changes will apply from 3 January 2018. IDD changes will apply from 23 February 2018, along with Short Form A amendments. IDD changes will now apply from 1 October 2018. Short Form A amendments will still apply from 23 February 2018.

The European Commission has delayed the application date of the IDD to 1 October 2018 (see August 2018 update above).

The PRA has made the necessary changes for the implementation of IDD, on the basis of 1 October 2018 being confirmed. We consulted on this change in CP4/18. A new Rule Instrument has been included in an update to PS31/17 (Appendix 6).

In order to provide certainty for industry, HM Treasury has announced that the Government will delay making The Insurance Distribution (Regulated Activities and Miscellaneous Amendments) Order 2018 until the outcome of this proposal has been confirmed. This is expected to be after 23 February 2018, the original application date of the directive. When the Order comes into force, the Financial Conduct Authority (FCA) will be able to finalise their rules (which were published in near-final form on 19 January 2018). Firms will then be required to comply with those rules from whatever date is ultimately agreed as the application date of the directive.

Policy Statement 31/17 - June 2018