The Financial Services (Overseas Recognition Regime Designations) Regulations 2025 establish the framework under which HM Treasury can designate the laws and practices of other countries or territories as equivalent to UK financial services and markets law, exercising powers granted by the Financial Services and Markets Act 2023.
The Regulations define what constitutes an 'overseas recognition regime designation,' grant the Treasury power to impose conditions, require decision-making coordination among the Treasury and key regulators (FCA, PRA, Bank of England), and introduce specific information-gathering powers.
Furthermore, the document amends existing legislation regarding insurance and short selling regulations to align them with this new designation regime.
Arguments For
Establishes a clear, updated framework for designating foreign financial service laws and practices as equivalent to UK standards, facilitating international engagement post-exit.
Formalizes the process through which the Treasury can grant equivalence or recognition to overseas regimes, providing regulatory certainty for international firms operating under these designations.
Imposes necessary coordination mechanisms between the Treasury, the FCA, the PRA, and the Bank of England, ensuring a unified approach to equivalence decisions and information sharing.
Replaces previous EU Exit equivalence regulations, streamlining the statutory basis for these designations under the Financial Services and Markets Act 2023.
Arguments Against
The creation of new designations introduces potential regulatory divergence or complexity if equivalence criteria are applied inconsistently across different sectors or territories.
Granting the Treasury broad power to require information from regulators (Regulation 4) could impose new administrative burdens on bodies like the FCA and PRA.
Amendments to existing laws, such as removing Gibraltar from the definition of "overseas jurisdiction" in related regulations (Regulation 7), necessitate adjustments across multiple pieces of legislation and could impact specific existing arrangements.
Relying on the Treasury's discretion to define the scope and conditions of designations (Regulation 3) could lead to uncertainty until specific designations are made public.
The Treasury make these Regulations in exercise of the powers conferred by sections 4, 84(2) and 86(5) of the Financial Services and Markets Act 20231.
In accordance with section 4(9) of that Act2, a draft of this instrument has been laid before, and approved by resolution of, each House of Parliament.
The Treasury created these Regulations using powers granted by Sections 4, 84(2), and 86(5) of the Financial Services and Markets Act 2023.
Before becoming law, a draft of these Regulations was formally presented to, and approved by a resolution in, both Houses of Parliament, as required by Section 4(9) of that Act.
- Citation, commencement and extent
(1) These Regulations may be cited as the Financial Services (Overseas Recognition Regime Designations) Regulations 2025.
(2) These Regulations come into force on 28th November 2025.
(3) These Regulations extend to England and Wales, Scotland and Northern Ireland.
The official title of this instrument is the Financial Services (Overseas Recognition Regime Designations) Regulations 2025.
The rules become effective on November 28, 2025.
These regulations apply across the entire United Kingdom, covering England, Wales, Scotland, and Northern Ireland.
- Overseas recognition regime designations
(1) For the purposes of these Regulations, an “overseas recognition regime designation” is a designation (however described) by the Treasury made under—
(a) a provision listed in the Schedule, or
(b) any other enactment which provides that the law and practice which applies in another country or territory in relation to a relevant area of law and practice—
(i) is equivalent to, or
(ii) has equivalent effect, taken as a whole, to,
the law and practice of the United Kingdom.
(2) In paragraph (1)—
(a) a reference to a relevant area of law and practice is to any such area that relates to financial services or markets (whether generally or in respect of particular matters);
(b) “territory” includes the European Union and any other international organisation or authority comprising countries or territories.
This section defines what an 'overseas recognition regime designation' is: any designation made by the Treasury recognizing foreign law or practice as equivalent to UK law for financial services matters.
This equivalence can be established either under specific provisions listed in the Schedule or under other relevant laws, provided the foreign regime is substantially equivalent to the UK's.
The definition clarifies that 'territory' encompasses the European Union and other multinational bodies related to finance.
- Overseas recognition regime designations: supplementary provision
(1) A power of the Treasury under any enactment to make an overseas recognition regime designation includes power—
(a) to revoke or vary an overseas recognition regime designation made under the power,
(b) to impose conditions or limitations on the application of the designation.
(2) Paragraph (1) is subject to any contrary intention that appears in the enactment concerned.
Any statutory power held by the Treasury to issue an equivalence designation inherently includes the power to later change, remove, or place specific constraints or limitations on that designation.
However, this supplementary power applies only if the underlying Act does not explicitly state a different intention regarding the managing or revoking of such designations.
- Information and advice
(1) The Treasury may by notice require a regulator to provide any information or advice that the Treasury consider is necessary to enable the Treasury to decide whether to make, amend or revoke an overseas recognition regime designation.
(2) The notice must—
(a) specify or describe the information or advice being sought,
(b) specify a reasonable period within which the information or advice must be provided, and
(c) be given in writing.
(3) A regulator may provide information or advice to the Treasury in connection with any—
(a) overseas recognition regime designation, or
(b) proposal for an overseas recognition regime designation,
in the absence of a notice under paragraph (1).
(4) In this regulation, “regulator” means—
(a) the FCA,
(b) the PRA, or
(c) the Bank of England.
The Treasury holds the power to formally demand specific information or advice from the FCA, PRA, or Bank of England if needed to evaluate the creation, modification, or cancellation of an overseas designation.
Any formal request must be in writing, clearly detail what is required, and set a reasonable deadline. Regulators also retain the ability to proactively offer relevant information to the Treasury without being asked.
- Co-ordination of functions
(1) The relevant bodies must co-ordinate the discharge of their respective functions in relation to—
(a) the making, amending or revoking of overseas recognition regime designations, and
(b) the provision of information and advice under regulation 4.
(2) The relevant bodies must prepare and maintain a memorandum describing in general terms how they propose to—
(a) exercise their respective functions in relation to the matters mentioned in paragraph (1), and
(b) comply with the obligation imposed by that paragraph.
(3) In paragraphs (1) and (2) “the relevant bodies” means—
(a) the Treasury,
(b) the FCA,
(c) the PRA, and
(d) the Bank of England.
(4) The Treasury must—
(a) lay before Parliament a copy of the memorandum, and
(b) publish it in a way appearing to the Treasury to be best calculated to bring it to the attention of the public.
The Treasury, FCA, PRA, and Bank of England ('the relevant bodies') must coordinate their activities concerning the establishment, modification, or revocation of designations, and their handling of information sharing under Regulation 4.
These bodies must create and keep a formal memorandum detailing how they plan to carry out these coordination duties.
The Treasury is responsible for presenting this memorandum to Parliament and publishing it publicly.
- Disclosure of information
Sections 348 to 350 and 352 of FSMA 2000 (disclosure of information) apply in relation to information received by the Bank of England for the purposes of, or in discharge of, any of its functions under regulation 4 as if—
(a) in section 348(2), for paragraph (b), there were substituted—
“(b) was received by the primary recipient for the purposes of, or in the discharge of, any of the functions of the Bank of England under regulation 4 of the Financial Services (Overseas Recognition Regime Designations) Regulations 2025;”;
(b) in section 349, after subsection (1), there were inserted—
“(1A) Section 348 does not prevent a disclosure of confidential information which is made by the Bank of England to the Treasury for the purposes of, or in discharge of, any of its functions under regulation 4 of the Financial Services (Overseas Recognition Regime Designations) Regulations 2025.”;
(c) in section 350—
(i) in subsection (1), after paragraph (a), there were inserted—
“(aa) the Bank of England, if the disclosure is made for the purpose of assisting or enabling the Bank of England to discharge its functions under regulation 4 of the Financial Services (Overseas Recognition Regime Designations) Regulations 2025, or”;
The existing rules governing the disclosure of privileged information under the Financial Services and Markets Act 2000 (FSMA 2000) are modified to apply to information the Bank of England receives while performing its duties under Regulation 4.
Specific amendments ensure that Section 348 correctly identifies information received by the Bank for these designation purposes.
A new exemption is inserted into Section 349 to permit the Bank to disclose this confidential information directly to the Treasury for the purposes of these regulations.
Further changes adjust Section 350 to allow the Bank of England to share information for the purpose of discharging its own functions under these rules.
- Amendment to the Insurance and Reinsurance Undertakings (Prudential Requirements) Regulations 2023
(1) The Insurance and Reinsurance Undertakings (Prudential Requirements) Regulations 2023 are amended as follows.
(2) In Part 4 (overseas insurance regime), in regulation 10 (interpretation), in the definition of “overseas jurisdiction” omit “or Gibraltar”.
These Regulations amend the existing Insurance and Reinsurance Undertakings (Prudential Requirements) Regulations 2023.
Specifically, in Part 4, Regulation 10, which defines 'overseas jurisdiction,' is modified by removing the specific inclusion of Gibraltar.
- Amendments to the Short Selling Regulations 2025
(1) The Short Selling Regulations 2025 are amended as follows.
(2) In Part 1 (general provisions), in regulation 3(1) (interpretation)—
(a) in the definition of “overseas jurisdiction”, for “jurisdiction other than” substitute “territory outside”; and
(b) insert in the appropriate place the following definition—
““territory” includes the European Union and any other international organisation or authority comprising countries or territories;”.
The Short Selling Regulations 2025 receive corresponding changes in Part 1, Regulation 3(1).
The term 'overseas jurisdiction' is updated to refer to a 'territory outside' the UK, replacing the previous phrasing 'jurisdiction other than'.
Additionally, the definition of 'territory' is formally inserted into this regulation, mirroring the definition used elsewhere, to include the European Union and other relevant international bodies.
Schedule
Overseas Recognition Regimes
The Insurance and Reinsurance Undertakings (Prudential Requirements) Regulations 2023, regulation 11.
The Short Selling Regulations 2025, regulation 11(1).
The Schedule lists the specific provisions in other legislation that fall under the scope of an 'overseas recognition regime designation' as defined in Regulation 2(1)(a).
This list currently names regulation 11 of the Insurance and Reinsurance Undertakings (Prudential Requirements) Regulations 2023 and regulation 11(1) of the Short Selling Regulations 2025.
Explanatory Note
(This note is not part of the Regulations)
These Regulations make supplementary provision in relation to the Treasury’s powers under other legislation to designate the law and practice of another country or territory as equivalent to that of the United Kingdom in relation to an area of financial services and markets law and practice or where it is exercising powers specified in the Schedule to the Regulations. These Regulations restate with modifications the Equivalence Determinations for Financial Services and Miscellaneous Provisions (Amendment etc) (EU Exit) Regulations 2019 (S.I. 2019/541), which are revoked by section 1(1) of, and Schedule 1 to, the Financial Services and Markets Act 2023 (c. 29).
Regulation 2 and the Schedule define “overseas recognition regime designation” for the purposes of the Regulations.
Regulation 3 ensures that the Treasury are able to impose conditions or limitations on the application of an overseas recognition regime designation or to revoke or vary it.
Regulation 4 gives the Treasury the power to require the regulators to give the Treasury any advice or information they consider necessary to decide whether to make an overseas recognition regime designation.
Regulation 5 provides for the coordination of the functions of the Treasury and the regulators in relation to their functions under these Regulations.
Regulation 6 ensures that information received by the Bank of England is subject to the same requirements in relation to the disclosure of confidential information as information received by the other regulators.
Regulations 7 and 8 make amendments to other secondary legislation in order to establish uniformity across overseas recognition regimes.
A full impact assessment has not been produced for this instrument as no, or no significant, impact on the private, voluntary or public sector is foreseen.
This explanatory note confirms the Regulations supplement Treasury powers regarding equivalence designations under financial law, replacing equivalent provisions previously made under EU exit legislation.
The note outlines that Regulation 2 and the Schedule define the designations, Regulation 3 permits Treasury to vary or condition designations, and Regulation 4 grants information-gathering powers over regulators.
Regulation 5 mandates coordination between the Treasury and the various regulators, while Regulation 6 ensures the Bank of England's handling of confidential information remains consistent with other regulators.
Finally, Regulations 7 and 8 update other relevant financial laws for consistency, and a full impact assessment was deemed unnecessary as no significant sector impact is anticipated.