Thirty Seventh Report Contents

Instruments of interest

Draft Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2020

36.This Order amends the regulatory framework for providers of pre-paid funeral plan contracts, so that they will generally need to be authorised by the Financial Conduct Authority (FCA). The instrument allows appointed representatives, such as funeral directors, to negotiate the sale of funeral plan contracts while not being fully authorised by the FCA, if a funeral plan provider agrees to be accountable for them complying with FCA rules for their activities. The instrument also makes changes to allow the Financial Ombudsman Service to deal with complaints in this area.

37.The measures are being introduced in response to growing concerns about poor sales practices in the pre-paid funeral plan sector. HM Treasury (HMT) says that the current voluntary regulatory system does not cover all providers and is not sufficiently robust to ensure fair treatment, especially of vulnerable consumers. According to HMT, compulsory regulation is necessary and was supported by a majority of respondents during consultation.11 To give the FCA enough time to design, consult on and implement enforceable rules and standards and to give the sector time to prepare and seek authorisation, the new regulatory framework will come into force 18 months after this instrument is made.

Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) (No. 2) Regulations 2020 (SI 2020/1247)

38.This instrument grants states of the European Economic Area (EEA) and Gibraltar approval as equivalent third countries and their audit regulatory authorities status as approved third country competent authorities. This approval is indefinite; a time-limited approval until 31 December 2020 introduced by earlier EU Exit legislation is withdrawn. The Department for Business, Energy and Industrial Strategy (BEIS) says that the approval aims to ensure that the UK’s audit regulatory regime will continue to allow for cross-border listing of securities on the UK’s regulated markets by companies in the EEA and Gibraltar, and that there are no obstacles in the UK framework for regulatory cooperation with the competent authorities in the EEA. This is one of a number of equivalence decisions made by the Government.12 The instrument also extends the period during which the Independent Regulatory Board of South Africa will be approved provisionally as an approved third country competent authority from 31 July 2022 until 30 April 2026, reflecting a Commission Implementing Decision that will become retained EU law after the end of the Transition Period.

39.We asked BEIS whether the EU had reciprocated the equivalence decision. The Department responded that it had “submitted material to the European Commission answering questions it had asked for the purpose of an assessment by the Commission of the equivalence of the UK under Article 46 of the Audit Directive and the adequacy of the Financial Reporting Council under Article 47 as the UK’s audit competent authority. We are yet to receive a response.”

Patents, Trade Marks and Designs (Address for Service) (Amendment) (EU Exit) Rules 2020 (SI 2020/1317)

40.This instrument ensures that from 1 January 2021 only an “address for service” (AfS) in the UK (including the Isle of Man), the Channel Islands or Gibraltar will be permitted in proceedings before the UK Intellectual Property Office (IPO).13 AfS from the European Economic Area (EEA) will no longer be accepted. These changes will apply to actions such as new applications and new requests to initiate proceedings at the IPO, covering trade marks, registered designs, unregistered designs and patents. The current rules will continue to apply to proceedings still pending at the end of the Transition Period (TP) and the instrument includes a transitional provision to meet the UK’s commitments under the Withdrawal Agreement: over two million registered EU trade marks and designs will be re-created on the UK register to give rise to corresponding UK domestic rights after the end of the TP. These rights will retain their EEA AfS for three years after the end of the TP.

41.The IPO explains that the changes mirror changes made by the EU: after the end of the TP, UK applicants for trade marks and designs at the EU’s Intellectual Property Office (EUIPO) will no longer be able to use a UK representative or attorney for correspondence purposes and UK attorneys will lose the ability to represent clients at the EUIPO. Instead, UK applicants will have to use a representative in the EEA. The IPO says that smaller attorney firms are supportive of the changes in this instrument which they expect to “help reduce the loss of business arising from the UK’s withdrawal from the EU”.

42.The IPO says that UK applicants will continue to be able to use UK representatives and rely on AfS in the UK for applications at the European Patent Office (EPO), as the EPO is not an EU body and instead grants applications for patents according to the European Patent Convention which has non-EU members such as Switzerland and Turkey.

Producer Responsibility Obligations (Packaging Waste) (Amendment) (England) Regulations 2020 (SI 2020/1336)

43.These Regulations make changes to the overall targets for the recycling of packaging waste as well as the targets for specific materials, such as glass, plastic, aluminium and paper. The instrument deals with England; Wales, Scotland and Northern Ireland will make similar changes separately. The Department for Environment, Food and Rural Affairs (Defra) explains that businesses are currently under an obligation to recycle a proportion of the packaging that they place on the market if they handle more than 50 tonnes of packaging per year and have an annual turnover of more than £2 million. The current targets cover the period 2018 to 2020 and were announced at Budget 2017. This instrument changes the overall target for the recycling of packaging waste, as well as the material specific recycling targets for 2021 and 2022, which are increased incrementally.

44.According to Defra, the current overall recovery target requires businesses to recover 82% of all their packaging waste, of which a minimum of 92% has to be recycled, leaving a maximum of 8% of the total recovery obligation which can be achieved by other recovery activities, such as treating packaging waste at combustion plants to generate power and/or heat. The overall recycling target is increased slightly by this instrument, but it is expressed differently, so the current 92% target will no longer apply, while no new overall recovery target is set, so businesses will only have to meet the new recycling targets for packaging waste. Defra told us that this is “in line with the Packaging Directive, which also moved to solely recycling targets in 2018”, adding that recycling “is considered to generate better environmental outcomes than recovery” and dropping the recovery target “removes an incentive for material going to activities which are lower on the wate hierarchy”, reflecting a commitment made by the Government in the Resources and Waste Strategy14 to increase the recycling of packaging waste. We are publishing at Appendix 3 additional information from Defra that provides further context, including about future targets and the consultation exercise.


11 HMT, ‘Regulation of pre-paid funeral plans: response to the consultation’ (March 2020): https://www.gov.uk/government/consultations/regulation-of-pre-paid-funeral-plans-consultation-on-a-policy-proposal [accessed 3 December 2020].

12 See statement by the Chancellor of the Exchequer on the Future of Financial Services, HC Deb, 9 November 2020, vol. 683, col 619, and HMT, HM Treasury equivalence decisions for the EEA States (9 November 2020): https://www.gov.uk/government/publications/hm-treasury-equivalence-decisions-for-the-eea-states-9-november-2020/hm-treasury-equivalence-decisions-for-the-eea-states-9-november-2020 [accessed 8 December 2020].

13 An AfS is an address that is used to correspond with the IPO and for proceedings under IP legislation. It can be the address of the person making the application or their attorney or representative.

14 Defra, Resources and waste strategy for England (18 December 2018): https://www.gov.uk/government/publications/resources-and-waste-strategy-for-england [accessed 3 December 2020].




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