Fifth Delegated Legislation Committee
Tuesday 13th October 2026
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16:30
16:30
Speaker 2
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Speaker 2
Is it the wish of the committee that the instruments be debated together? Take that as a yes. I will now call the minister to move the first motion. And speak to all three of the instruments at the end of the debate. I will put the question on the first motion and then ask the Minister to move the remaining motions. Formerly. Minister.
16:30
Speaker 3
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Speaker 3
Thank you very much, chair. I beg to move that the committee considers the three statutory instruments before us today. Although the instruments contain and concern distinct parts of the financial services regulatory system, they share a common purpose, which is to ensure that the UK regulatory framework remains clear, proportionate and able to support growth whilst maintaining appropriate safeguards and financial stability. So I'll address each instrument in turn, beginning with the Overseas Prudential Requirements regime regulations following EU exit, the UK retained a body of EU derived financial services legislation, including the UK Capital Requirements Regulation, which sets prudential requirements for banks, building societies and larger investment firms.
The first instrument supports the government's programme of replacing that assimilated law with a framework tailored to the UK. It brings the existing UK capital requirements regulation equivalence regimes together in a single overseas prudential requirements regime, and the instrument also makes targeted changes so that the treatment of exposures to overseas exchanges better reflects the underlying risk updates. The definition of overseas investment firms, without changing the overall scope of existing treatment, and enables eligible overseas covered bonds to be recognised in future, subject to a further statutory instrument.
The second S I makes a targeted and important reform to the UK's framework for regulating OTC derivatives those traded directly between buyer and seller. By addressing Intragroup transactions, it replaces the temporary Intragroup exemption regime, which everyone present will know is Tiger with a permanent framework, and in doing so, it provides firms with long term certainty while preserving appropriate safeguards and regulatory oversight. The benefits of oversight of intragroup transactions are well recognised, and so exemptions from certain clearing and margin requirements for certain transactions are a feature of regulatory regimes in the UK and in other jurisdictions.
Tiger was introduced following EU exit and it was to provide a temporary regime for exempting certain transactions, but it was only only ever intended to be temporary and having been extended once already, it's due to expire at the end of this year, so government considers that a further time limited extension would not provide the long term framework that and indeed stability that firms need. So this instrument therefore establishes a permanent framework for qualifying intragroup transactions.
The third C concerns the legislation governing building societies, specifically the Building Societies Act 1986. So this order makes two specific changes. Firstly, it removes the requirement currently placed on building societies to execute legal documents, such as mortgage deeds using a common seal, enabling them to use authorised signatures instead. This is a practical and a proportionate modernisation, reducing unnecessary administrative burdens and then second chair. The order makes a specific and limited exemptions from the wholesale funding calculation, which building societies are required to make to ensure they continue to be majority owned by their members.
So taken together, these instruments modernise our financial services framework. They replace or update inherited arrangements, provide greater clarity and certainty, and support the effective functioning and competitiveness of UK of the UK financial sector, whilst maintaining appropriate safeguards. And I commend the Instruments Chair to the Committee.
The first instrument supports the government's programme of replacing that assimilated law with a framework tailored to the UK. It brings the existing UK capital requirements regulation equivalence regimes together in a single overseas prudential requirements regime, and the instrument also makes targeted changes so that the treatment of exposures to overseas exchanges better reflects the underlying risk updates. The definition of overseas investment firms, without changing the overall scope of existing treatment, and enables eligible overseas covered bonds to be recognised in future, subject to a further statutory instrument.
The second S I makes a targeted and important reform to the UK's framework for regulating OTC derivatives those traded directly between buyer and seller. By addressing Intragroup transactions, it replaces the temporary Intragroup exemption regime, which everyone present will know is Tiger with a permanent framework, and in doing so, it provides firms with long term certainty while preserving appropriate safeguards and regulatory oversight. The benefits of oversight of intragroup transactions are well recognised, and so exemptions from certain clearing and margin requirements for certain transactions are a feature of regulatory regimes in the UK and in other jurisdictions.
Tiger was introduced following EU exit and it was to provide a temporary regime for exempting certain transactions, but it was only only ever intended to be temporary and having been extended once already, it's due to expire at the end of this year, so government considers that a further time limited extension would not provide the long term framework that and indeed stability that firms need. So this instrument therefore establishes a permanent framework for qualifying intragroup transactions.
The third C concerns the legislation governing building societies, specifically the Building Societies Act 1986. So this order makes two specific changes. Firstly, it removes the requirement currently placed on building societies to execute legal documents, such as mortgage deeds using a common seal, enabling them to use authorised signatures instead. This is a practical and a proportionate modernisation, reducing unnecessary administrative burdens and then second chair. The order makes a specific and limited exemptions from the wholesale funding calculation, which building societies are required to make to ensure they continue to be majority owned by their members.
So taken together, these instruments modernise our financial services framework. They replace or update inherited arrangements, provide greater clarity and certainty, and support the effective functioning and competitiveness of UK of the UK financial sector, whilst maintaining appropriate safeguards. And I commend the Instruments Chair to the Committee.
16:34
16:34
Speaker 4
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Speaker 4
Well, thank you, Mr. Morrison, and you'll be delighted to hear that this is a highly uncontentious set of proposals, which on this side, we are fully behind. There is an opportunity potentially to talk about the merits of the 1986 Building Societies Act and how that could be updated, but now is probably not the time. So you'll be delighted to hear that. I'll bring my words to a close right now.
Thank you.
Thank you.
16:34
16:35
Speaker 2
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Speaker 2
You might think that I can possibly. The question is that the Committee has considered the draft overseas prudential requirements regime credit Institutions and Investment Firms Regulations 2026. As many as are of that opinion, say I. I to the contrary. No, I think the ayes have it. The ayes have it.
16:35
16:35
16:35
16:35