On May 23, 2016, an Order was published implementing provisions in the Banking Act 2009, providing powers to HM Treasury to make regulations about financial collateral arrangements. The relevant provisions come into force on May 25, 2016. Financial collateral arrangements are arrangements under which financial collateral is used as security in respect of a loan or other liability, such as cash and securities. The scope of regulation HM Treasury can make is not restricted purely to provisions required in order to implement the Financial Collateral Directive. This is presumably a prelude to restating the Financial Collateral Arrangements (No. 2) Regulations 2003 in light of recent Supreme Court decision, The United States of America v Nolan, expressing doubt as to its enforceability owing to such regulations arguably going beyond EU laws in some respect and therefore not being made validly under the European Communities Act 1972. The relevant provisions of the Banking Act provide that HM Treasury can make any provision it deems necessary or desirable for the purpose of enabling financial collateral arrangements, whether or not with an international element, to be commercially useful and effective. The regulations may, in particular, make provision for the enforcement of financial collateral arrangements, and include matters relating to the rule of law about formalities or evidence, insolvency, administration and receivership.
The Order is available at: http://www.legislation.gov.uk/uksi/2016/598/pdfs/uksi_20160598_en.pdf and the Supreme Court Decision is available at: https://www.supremecourt.uk/cases/docs/uksc-2014-0073-judgment.pdf.
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