Financial Services (Miscellaneous Amendments) Regulations 2022

Baroness Bowles of Berkhamsted Excerpts

Tuesday 15th November 2022 Lords Chamber

[Baroness Bowles of Berkhamsted (LD)]

My Lords, I thank the Minister for the introduction. It does not matter how many times I read these kinds of explanations about what is going on, I still find them totally incomprehensible and I doubt I am alone.

I have two very short questions. First, does this mean that for a period there was a lacuna when neither EU nor UK regulators held sway and Gibraltar was doing its own thing while having access to the UK as it always had done? If that was the case, did the Gibraltarian financial services authorities know? I cannot tell whether there was such a lacuna or not.

Secondly, on the temporary permissions relating to STS—I declare an interest as an erstwhile director of Prime Collateralised Securities ASBL, which looked over such things as STS to check them out—is this how it will be for ever? Will we extend this by another two years every two years? Does this happen until the UK regulators think they need a change and do something different? It seems to me that we did an awful lot of temporary permissions. I do not like to think that we will have to do them all over again every two years, because that will take an awful lot of parliamentary time. I would like to get a handle on whether this is the way of the future or whether there will be an end to these temporary permissions.

[Lord Tunnicliffe (Lab)]

My Lords, I thank the Minister for introducing this SI. It seems that she and I agree that it is really two SIs, covering Gibraltar and securitisation.

To take Gibraltar first, as far as I can tell, the SI simply clarifies the application of UK regulation to Gibraltar. The Money Laundering and Terrorist Financing (High-Risk Countries) (Amendment) (No. 2) Regulations 2022 set out a new list of high-risk third countries in relation to which enhanced due diligence requirements apply under the principal money laundering regulations. Gibraltar has been added and Malta removed; the changes apply from 12 July 2022. Will this SI assist Gibraltar in getting off the high-risk list? If so, how will the UK regulatory authorities be involved? I am trying to understand this; how different will the regulation of financial services firms in Gibraltar be from, for example, the regulation of a financial services firm in Birmingham?

The second part of this SI seems solely about extending the present transitional arrangements for a further two years. The clearest statement of this is in the de minimis assessment—I like the assessments, when I get round to reading them, because they tend to be written in easier language:

“This SI is required to address this misalignment of dates in order to prevent looser due diligence requirements for EU STS securitisations than UK ones. This SI will also prevent additional administrative burdens on firms which could arise from the absence of an exemption for EU STS securitisations from the clearing obligation. This instrument will help”—


I would quibble with that word—

“bridge this gap until a permanent framework for designating equivalent jurisdictions with regard to securitisation regimes is in effect and an assessment of the EU can be undertaken under it.”

Am I right in my precis? When and how will

“a permanent framework for designating equivalent jurisdictions”

be determined?