The Financial Services (Implementation of Legislation) Bill [HL] is a government bill, which had its first reading in the House of Lords on 22 November 2018 and is due its second reading on 4 December 2018. The bill would provide a delegated power to enable the Treasury to make corresponding or similar provision to specified pieces of EU financial services legislation in the event that the UK leaves the European Union without a deal.
The financial services industry is of particular importance to the UK economy, contributing 6.5 percent of its total economic output. Currently, most financial services regulation is made at EU level and is either directly applicable or transposed into domestic law by secondary legislation.
In preparation for leaving the EU, the European Union (Withdrawal) Act 2018 (EUWA) incorporates all EU law on the day of exit into UK law to provide continuity and so that existing regulation continues to have effect after Brexit. If the UK ratifies the withdrawal agreement, it will enter an implementation period until December 2020, during which EU law will continue to apply. During this period the UK will continue to implement financial services regulation through secondary legislation. However, if the UK leaves the EU with no deal, there will be no mechanism through which financial services regulation can be updated without the need for primary legislation.
There are several pieces of in-flight EU financial services legislation, which have either been adopted by the EU but will not be implemented by the time the UK leaves, or that are currently under negotiation and may be adopted shortly after. The bill proposes to give the Treasury the power to make provision for these specified items in UK law, subject to any adjustments appropriate to make them suitable for a UK context. The power is subject to the same restrictions on scope as the correcting power in the EUWA and may only be used up to two years after exit day. The bill proposes that statutory instruments made in accordance with the power be subject to the affirmative resolution procedure, which requires a vote in both Houses. The Treasury will be required to produce annual reports on the use of the power.
The House of Lords Delegated Powers and Regulatory Reform Committee is due to publish its opinion on the bill before committee stage in the House of Lords.
