Chapter 3: Accountability of regulators FCA and PRA powers to make rules etc Section 33: Effect of rules etc on international trade obligations
This section amends FSMA 2000 by inserting a new section 409B, requiring the FCA and the PRA to notify HM Treasury of a relevant action if they consider there to be material risk that the action would be incompatible with the UK’s international trade obligations.
	Subsection (1) outlines that this mechanism will apply only in scenarios where the FCA or the PRA propose to take a "relevant action" and considers there to be a material risk that the action would be incompatible with an international trade obligation. Under subsection (12), the only international trade obligations which the regulator must consider for the purposes of this section are the UK’s obligations relating to financial services or markets under free trade agreements or the 1994 Marrakesh Agreement which established the World Trade Organisation.
	Subsection (2) requires the regulator to give HM Treasury written notice of the proposed action before taking it (see separately the requirement under subsections (10) and (11)).
	Subsection (3) limits the notification requirement in subsection (2) to situations where the regulator proposes to take a relevant action, and a duty to consult publicly applies in respect of the action.
	Subsection (4) defines what constitutes a "relevant action" under this section. These are if the PRA or the FCA propose to make rules under FSMA 2000 or any other enactment, or make changes to its general policies and practices relating to their respective supervisory remits.
	Subsection (5) provides that a "duty to consult" (publicly) for the purposes of subsection (3) means i) a duty imposed by sections 138I or 138J FSMA 2000 to publish draft rules, or ii) any other duty to publish the proposal to take the action. Examples of (ii) include duties under common law, or a statutory requirement under Article 42(3) of Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012 (Retained EU Legislation). If there is no duty to consult as defined in subsection (5), including where the FCA or the PRA are relying on an exemption from the duty to consult, the test in subsection (3) is not satisfied. Examples of such exemptions applicable to the regulator include section 138L FSMA 2000 (Consultation: general exemptions) and Article 42(4) of Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012 (Retained EU Legislation). Note that the treatment of the exemption in section 138M(1) of FSMA 2000 (consultation: exemptions for temporary product intervention rules) has been modified for the purposes of new section 409B.
	Subsection (6) states that section 138M(1), which is the FCA’s exemption relating to temporary product intervention rules, should be ignored for the purposes of assessing whether there is a "duty to consult" for the purposes of subsection (5). Subsection (6) should be read alongside subsections (8)(a) and (9) which introduce a narrower exception from the requirement in subsection (2) in relation to product intervention rules.
	Subsection (7) requires the regulator to give the written notice under subsection (2) prior to consulting publicly in respect of the relevant action.
	Subsection (8) also exempts the regulator from the requirement in subsection (2) where the proposed action has been undertaken to comply with a direction given by the Financial Policy Committee of the Bank of England or to act in accordance with a recommendation made by the same committee.
	Subsection (9) provides the condition for subsection (8)(a) to apply, and covers situations where the regulator considers that delay involved in complying with the requirement in subsection (2) would be prejudicial to advancing a) the consumer protection objective or b) if an order under section 137D(1)(b) of FSMA 2000 is in force, the integrity objective.
	Subsection (10) provides that subsection (11) applies in circumstances where a notification is not made under subsection (2) prior to a relevant action being taken, either because there is no duty to consult publicly in respect of that action or because the exception relating to product intervention rules under subsection (8)(a) applies.
	Subsection (11) provides that in those circumstances, the regulator must give written notice to HM Treasury as soon as reasonably possible after taking a relevant action if it appears that there is a material risk that the action is incompatible with an "international trade obligation".