• UK FCA and UK PRA issued consultations on proposals to replace EU guidelines on the prudential assessment of acquisitions and increases of qualifying holdings in financial sector (3L3 guidelines) with a new PRA supervisory statement (SS) and FCA guidance.

Background

• EBA, EIOPA, ESMA updated 3L3 guidelines in 2017, setting a common understanding of 5 assessment criteria to be applied, along with considerations under each criteria; are listed in Bank of England and PRA approach after the UK’s withdrawal from the EU.
• FCA non-handbook guidance outlines Brexit approach to EU non-legislative material.
• 3L3 guidelines are currently still referred to in UK FCA handbook/on website, and they have continued to be relevant to UK change in control (CIC) transactions since Brexit.

Proposed Changes

• Develop a new SS prudential assessment of acquisitions and increases in control and new UK FCA guidance largely replicating EU 3L3 guidelines, but with some re-phrasing.
• Changes would align to UK approach/reflect FSMA 2023 modified condition power.
• Would also replace SS33/15 Aggregation of holdings for the purpose of prudential assessment of controllers, with this text moved to new SS with minor amendments.
• Implementation date for UK PRA SS and UK FCA guidance would be summer 2024.

Effectiveness

• Comments are invited until 23 February 2024