Regulatory Outlook | March 2022
Published on 28th Mar 2022
Welcome to the Regulatory Outlook, providing you with high-level summaries of important forthcoming regulatory developments to help you navigate the fast-moving business compliance landscape in the UK.
Key developments this month include:
- The Online Safety Bill was introduced to Parliament on 17 March;
- The Economic Crime (Transparency and Enforcement) Act received Royal Assent; and
- Government guidance on mandatory climate-related financial disclosures which comes into force next month.
Contents
Bribery, fraud and anti-money laundering
Environmental, social and governance
Advertising and marketing
ASA and CAP launch consultation on alcohol alternatives
The Advertising Standards Authority (ASA) launched a consultation in response to the expanding market for non-alcoholic versions of alcoholic drinks. The consultation sets out new proposed rules to the Committee of Advertising Practice (CAP) and Broadcast Committee of Advertising Practice (BCAP) Codes. The consultation closes on 5 May 2022.
CAP has highlighted that, despite there being official government guidance on how alcohol content at or below 0.5% ABV should be described, this guidance is not legally binding. For more, see our Insight.
OSB introduced to Parliament
On 17 March, the Online Safety Bill (OSB) was introduced by the government and is currently subject to its second reading in the House of Commons. New measures include tougher criminal sanctions and an increased focus on content moderation.
The government also announced on 8 March that the OSB will be amended to include a new legal duty requiring platforms and search engines to prevent paid-for fraudulent adverts appearing on their services. Ofcom will set out further details on what platforms will need to do to comply with this duty, but the announcement of the duty itself has been welcomed by many stakeholders.
Many data-driven business models will need to be aware of the new duties set out in the bill and ensure compliance with the various content moderation and other requirements. Read more in our recent Insight.
Government launches consultation into online advertising
The OSB announcement comes as the government also launches a consultation into online advertising. The consultation aims to inform changes to the regulatory framework of paid-for online advertising in order to tackle the lack of transparency and accountability across the whole supply chain. The consultation closes on 1 June 2022.
ASA publishes guidance on advertising cryptoassets
Please see Consumer credit and payments.
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Bribery, fraud and anti-money laundering
Economic Crime (Transparency and Enforcement) Act passes
The Economic Crime Act received Royal Assent on 15 March 2022, and is designed to trace and target the "dirty money" of suspected criminals. The Act contains provisions relating to a beneficial ownership register for overseas entities holding UK real estate (see our Insight for more), the strengthening of Unexplained Wealth Orders (UWOs) and further powers of the Treasury in relation to sanctions.
The scope of the UWO rules has been extended to those who hold property in the UK in trusts. In addition to this, the requirements for pursuing UWOs have been amended to allow for pursuit where, provided the existing conditions are met, there are reasonable grounds for suspecting that the property has been obtained through unlawful conduct. The Act also includes a limitation on costs orders in relation to UWOs: costs are not now payable by an enforcement authority unless the authority acted unreasonably in pursuing the UWO or it acted dishonestly or improperly in carrying out the UWO. Finally, enforcement authorities have been given more time – up to 186 days – to review material provided in response to a UWO.
All businesses that attract overseas investment through corporate entities will need to consider amending their systems to reflect the requirements of the Act. Upgrades to processes may be necessary to ensure that they comply with these new provisions.
For more detail on this, see our Insight and see also Sanctions and Export Control.
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Competition
Environmental sustainability and UK competition law
On 14 March 2022, the Competition and Markets Authority (CMA) published its advice to the government on how the UK competition and consumer regimes can support environmental sustainability goals. (We previously reported on the call for inputs by the CMA to inform this advice in our Insight.)
While the CMA has not recommended any change to the existing competition rules, it is of the view that there are steps to be taken to support sustainability goals within the existing legal framework. The core action it proposes to take is to establish an internal Sustainability Taskforce. This will be "a focal point within the CMA for policy issues relating to sustainability". The taskforce will initially focus on developing formal guidance that will provide examples of when sustainability agreements would be permitted under competition law and how existing exemption criteria may apply to them. Other activities of the taskforce will include leading engagement with relevant stakeholders and developing the CMA's thinking on the relevancy of sustainability rules in areas not considered in the advice, such as the relevancy of sustainability issues to the application of the dominance rules.
For businesses that are grappling with the interaction between sustainability initiatives and competition rules, for instance businesses involved in environmental collaborations with competitors, it is hoped the taskforce's guidance will provide useful advice to ensure that such initiatives are not hampered by an overly restrictive competition law regime.
Government sets out plans for digital regulators
On 9 March 2022, the Secretary of State for the Department for Culture, Media and Sport published a letter sent to the Digital Regulation Cooperation Forum (DRCF). The DRCF is a joint initiative between the CMA, Ofcom, the Information Commissioner's Office (ICO) and the Financial Conduct Authority (FCA) and recognises that digitalisation has blurred the lines between regulation, often creating tension – for example between privacy goals and competition.
The letter highlighted the government's priorities for the digital regulatory landscape, and outlined the following key priorities:
- ensuring a joined up regulatory landscape;
- enabling a flexible and innovative approach to regulation;
- transparent engagement with stakeholders; and
- coordination on horizon scanning.
We are seeing regulators working closely together on a range of digital markets and any companies that engage with these regulators should be aware of this increased regulatory coordination, particularly in the context of any formal engagement.
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Consumer credit and payments
Guidance on advertising cryptoassets published
On 14 February 2022, the Committee of Advertising Practice (CAP) issued guidance on how the CAP Code applies to adverts for cryptoassets, taking into account the risks and complexities of these assets. In particular, advertisers must:
- Make clear that cryptoassets are not regulated by the UK Financial Conduct Authority (FCA) or protected by financial compensation schemes;
- Not take advantage of consumers' inexperience or credulity;
- Make clear that profits from cryptoasset investments attract capital gains tax;
- Include all material information; and
- Make clear that value can go down as well as up, state the basis used to calculate any projections or forecasts, and make clear that past performance is not a guide for future performance.
EBA issues final guidelines on limited network exclusion under PSD2
On 24 February 2022, the European Banking Authority (EBA) published a final report containing guidelines on the limited network exclusion (LNE) under the EU Payment Services Directive (PSD2).
The guidelines clarify how regulators should assess whether a network of service providers or a range of goods and services qualify as "limited" and are, therefore, not subject to PSD2. Payment instruments that might benefit from this exclusion include store cards, fuel cards, public transport cards, and meal vouchers. The guidelines, which aim to address inconsistencies in how the LNE has been applied across the EU, introduce provisions, criteria and indicators to ensure payment instruments that can benefit from the LNE are used in a limited way.
The guidelines will apply from 1 June 2022, with an additional three-month transitional period for issuers that already benefit from the exclusion to submit a new notification to their regulator.
Buy-now pay-later (BNPL) consultation update: response expected spring 2022
On 28 February 2022, as part of its response to a written question asking what assessment has been made of the impact of BNPL products on the UK’s retail industry, the Treasury stated that, following the Woolard Review and the government’s October 2021 consultation on policy proposals for the regulation of BNPL (covered in an earlier Insight), a consultation response will be published in spring 2022. We will keep you updated as the consultation progresses.
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Consumer law
OSB introduced to Parliament
Please see Advertising and marketing.
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Cyber security
Government launches consultation on security regulations
Please see Telecoms.
OSB introduced to Parliament
Please see Advertising and marketing.
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Data protection
European Commission publishes draft Data Act
On 23 February, the European Commission officially adopted its much-anticipated proposal for an EU Data Act, which seeks to establish a cross-sectoral governance framework for data access and use, whether by individuals, organisations or European public authorities. The Data Act has the potential to fundamentally change the environment for data-driven business models in the EU.
The Data Act will apply to manufacturers of connected products (such as Internet of Things devices) and providers of related services that are placed on the market in the EU, regardless of where the manufacturer is located. Manufacturers will have to make data generated by their use easily accessible to the user (whether an individual or a company), who can provide the data to third parties or use it for their own purposes. The Commission's intension is to foster innovation and the creation of value.
The Act also covers access to data by public authorities, and includes specific provisions on cloud services which require providers to enable customers to switch services within 30 days. Please see our Insight for more details and analysis.
ICO issues updated guidance on international data transfers
The ICO has issued updated guidance on transferring data overseas from the UK. The guidance provides welcome clarity on what constitutes a "restricted transfer".
One key point is the ICO's clarification that a transfer of personal data to a data importer which is based outside of the UK but subject to the UK GDPR, is a restricted transfer under the UK GDPR. This aligns with the position adopted by the European Data Protection Board in relation to the EU GDPR. The ICO's new International Data Transfer Agreement (IDTA - the UK's new equivalent to the EU standard contractual clauses) can be used in relation to this type of restricted transfer. This is different to the EU position, under which the new EU SCCs do not currently account for this scenario and the European Commission appears to be planning to prepare another set of SCCs for transfers to entities directly subject to the EU GDPR.
The updated guidance follows the publication in February of the IDTA, an Addendum to the EU SCCs and a document setting out transitional provisions, which were laid before Parliament. Please contact one of our experts below if you require any advice on what this means for updating your commercial agreements to comply with international data transfer requirements.
ICO releases new guidance on ransomware and data protection compliance
In response to a steady increase in the number and severity of personal data breaches caused by ransomware, the ICO released new guidance on ransomware and data protection compliance.
The guidance gives a checklist of measures that organisations can take to help prevent ransomware, then presents eight scenarios demonstrating the most common ransomware compliance issues seen by the ICO. These include: attacker sophistication; personal data breach; breach notification; law enforcement; attacker tactics, techniques and procedures; disaster recovery; ransomware payment; and testing and assessing security controls. The guidance is a helpful tool at a time when organisations across all sectors are at increasing risk from ransomware attacks.
Supreme Court ruling confirms privacy should be ensured for people undergoing a criminal investigation
In the case of Bloomberg LP v ZXC, the Supreme Court considered whether there is a general rule that suspects under criminal investigation have, prior to bring charged, "a reasonable expectation of privacy in respect of information relating to that investigation".
The court found that it is a "legitimate starting point" to assume there is an expectation of privacy in relation to such information. However, it also held that it is ultimately a fact-specific enquiry which requires an evaluation of all circumstances in the individual case.
This is a significant judgment in the area of privacy law and could make it more challenging for media companies to publish information about individuals who are under criminal investigation in certain circumstances.
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Employment and immigration
Increase in compensation limits announced
Legislation has been laid before Parliament setting out the annual increase in employment tribunal compensation limits and statutory payments where the relevant date for the purposes of calculating the award falls on or after 6 April 2022:
- A week's pay for calculating the unfair dismissal basic award and statutory redundancy payments will increase from £544 to £571.
- The maximum compensatory award for unfair dismissal will increase from £89,493 to £93,878 (or 12 months' salary if lower). There is no cap on compensation where an employee is dismissed for whistleblowing or carrying out health and safety activities.
Fundamental changes to right-to-work verification extended to September 2022
As previously flagged, changes to the right to work checks had been due to come in from 6 April 2022. The UK government had announced a number of changes, including the removal of physical document checks as an option, a digital system for British and Irish nationals, extensions to some of the Covid-19 concessions and several other fundamental changes. Full details of these changes can be found in our Insight.
On 22 February 2022, the government deferred the date for the changes from 6 April to 30 September 2022 (inclusive). One of the reasons for this deferral is so that employers have sufficient time to develop commercial relationships with identity service providers, make the necessary changes to their pre-employment checking processes, and carry out responsible on-boarding of their chosen provider.
IR35 honeymoon period ends 6 April – penalties and prosecutions loom relating to non-compliance in labour supply chains
IR35 is a tax measure which aims to suppress what HMRC has seen as a growth in false self-employment (for tax purposes) involving individual service providers (personal service companies or PSCs) being engaged via their own limited companies, from which they pay themselves dividends thereby taking employers national insurance contributions (NICs) and some income tax costs out of the labour supply chain. An upgraded IR35 regime came into force in April 2021 which effectively makes end users and any intermediaries such as staffing companies liable for PAYE and NICs relating to any PSCs who "fail" the IR35 self-employment tests.
As detailed in our Insight, the honeymoon period offered by HMRC relating to penalties for inaccuracies under the 2021 IR35 regime ends on 6 April 2022 and HMRC has already started flexing its muscles, with recent multi-million pound claims (including penalties and interest) against at least five government departments and government agencies for IR35 compliance failures (often associated with a belief that substitution rights will mean IR35 does not apply and misuse of the HMRC status assessment tool known as CEST).
All this is happening against a backdrop of well-documented skills shortages in many areas, which have made operational managers in many private sector organisations question the original risk-averse IR35 plans formulated by their legal and tax compliance departments in early 2021. Upholding low risk IR35 policies has been challenging in markets where competitors apparently ignore IR35 altogether and continue to use PSCs with apparent disregard for IR35 status. Some stakeholders are asking if the risk of not having the required talent, or losing talent to less scrupulous competitors, may outweigh the risk of not getting IR35 compliance 100% right. And so there is evidence that at some organisations the original compliance policies have been loosened.
Organisations should check their IR35 processes are up to date and being followed by line managers. They should also check generally their labour supply chain arrangements and do spot checks to ensure there is no tax evasion in their labour supply chain. More details on this can be found in our Insight.
What's on the HR agenda for employers?
To find all other important upcoming dates, including the gender pay gap reporting deadline, see our HR calendar.
Covid-19
Please see Health and Safety.
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Environment
175 nations adopt plan to deliver plastics treaty
At the UN Environment Programme (UNEP) on 2 March 2022, 175 nations adopted a draft resolution to deliver a plastics treaty. The resolution establishes an intergovernmental negotiating committee which will begin its work in 2022 with the aim of completing a draft global legally-binding agreement by the end of 2024. The legally binding instrument will address alternative approaches to dealing with the full lifecycle of plastics, including the design of reusable and recyclable products and materials. The agreement will also include the need for enhanced international collaboration to facilitate access to technology, capacity building and scientific and technical cooperation.
Environmental review mechanism – government publishes consultation response
On 3 March 2022, the Department for Environment, Food and Rural Affairs (Defra) published the government response to its consultation on amending the Civil Procedure Rules (CPR) to establish environmental review for the new independent statutory environmental body, the Office for Environmental Protection (OEP).
The Environment Act 2021 allows the OEP to use environmental review as an enforcement option where it has given a decision notice to a public authority and it considers there has been a serious failure to comply with environmental law.
The government's response highlights that the new environmental review process will largely reflect the judicial review procedures as set out in Part 54 of the CPR. The differences that the environmental review mechanism will have are that there will be no specific pre-action protocol, no permission stage and the Planning Court will be the forum.
The OEP's ambit will only include public authorities. However, its scope of enforcement will also extend to private bodies (such as water companies in respect of their public functions/duties) as per the OEP's draft strategy, "In some circumstances [public authorities] includes others, for example private companies, when they are carrying out public functions. These could be water companies, harbour authorities or other similar bodies." (Our emphasis.)
Government consults on new long-term environmental targets
On 16 March 2022, Defra published a consultation on environmental targets under the Environment Act 2021. The Act requires the government to set at least one long-term target in each of the following areas: air quality; water; biodiversity; and resource efficiency and waste reduction. The consultation sets out the government's proposals for each of these areas.
The government outlined that it has proposed targets that will deliver environmental outcomes in the areas where there are some of the greatest problems. It has also gone further by considering targets which go beyond the legal minimum that it is required to set, including additional proposals on: biodiversity; water; marine; and woodland cover.
The consultation closes on 11 May 2022. The targets set are then to be laid as draft statutory instruments by 31 October 2022 and will come into force once approved by Parliament.
Nature Recovery green paper: protected sites and species
As well as publishing the consultation on environmental targets, the government also published the Nature Recovery green paper which supports its aims to restore nature and halt the decline in species abundance by 2030. The publication of the paper has launched an eight-week consultation which sets out the following proposals: a new system of protections for sites and species; how the private sector can play its part; scaling up private investment in nature; a roadmap to achieve "30by30" – the government’s plan to protect 30% of land and sea by 2030, and to halt species decline by 2030; and assessment of Defra’s delivery landscape.
The consultation states that the environmental regulatory landscape for protected sites and species has become too complex and so the aim is to simplify and streamline environmental regulation.
The consultation closes on 11 May 2022.
Reducing the impact of nutrient pollution on protected sites
On 16 March 2022, the government published its policy paper on reducing the impact of nutrient pollution on protected sites. The policy confirms its support for nutrient neutrality across local planning authorities where protected sites are being damaged by nutrient pollution and announces a package of support to ensure that nutrient neutrality is deliverable. This includes: (1) practical support; (2) financial support; and (3) improvements to the legislative framework.
The government's proposed measures will include providing guidance produced by Natural England to support local planning authorities, assisting with the delivery of nutrient credit trading markets, working with the development and utilities industries to reduce nutrient pollution, and exploring further legislation designed to reduce nutrient levels at their source and bring forward sustainable development.
The policy paper confirms that Natural England has identified a further 20 protected sites which are adversely affected by nutrient pollution and, as such, Natural England has issued advice to a further 42 local planning authorities. This takes the current total number of local planning authorities impacted by the requirements associated with nutrient neutrality to 72 in England.
New plastic packaging tax comes into force next month
Please see Products.
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Environmental, social and governance
New guidance to support the development of green, social, and sustainability-linked loans
The Loan Market Association (LMA), Asia Pacific Loan Market Association (APLMA) and Loan Syndications and Trading Association (LSTA) on 3 March 2022 jointly published two new guidance documents as part of their continued work in relation to ESG and sustainable finance.
The first of these documents, "Guidance for Green, Social, and Sustainability-Linked Loans External Reviews", is intended to provide best practice guidance on the external review process for borrowers, lenders and others in the loan market. The second guidance document, "Guidance on Social Loan Principles", is designed to sit alongside the Social Loan Principles (SLP) which were jointly published by the LMA, APLMA, and LSTA in April 2021. This guidance is intended to provide greater clarity with regards to the requirements of the Social Loan Principles, and covers a number of frequently asked questions in relation to social loans.
BEIS guidance on mandatory climate-related financial disclosures by quoted companies, large private companies and LLPs
On 21 February 2022, the Department for Business, Energy and Industrial Strategy (BEIS) published non-binding guidance to help companies and limited liability partnerships (LLPs) understand how to meet new mandatory climate-related financial disclosure requirements under the Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022, and the Limited Liability Partnerships (Climate-related Financial Disclosure) Regulations 2022. The regulations were made on 17 January 2022 and apply to reporting for financial years starting on or after 6 April 2022. More details of these regulations can be found in the January edition of our Regulatory Outlook.
Among other things, the guidance provides details of:
- The scope of the regulations, including whether disclosure is required at group or subsidiary level.
- The information that should be included in relation to each of the element of the disclosure requirements common to the two sets of regulations.
- The level of detail required.
- Whether third party information can be relied on to make the disclosures.
- The interaction with other regulation and frameworks.
Read our Insight for more
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Food Law
Calorie labelling on labels and menus comes into force next month
From April 2022, large businesses will be required to display calorie information on menus and food labels. The Calorie Labelling (Out of Home Sector) (England) Regulations 2021 come into force on 6 April making it a legal requirement for large businesses (businesses with 250 or more employees) to display the calorie information of non-prepacked food and drink items that are prepared for immediate consumption. The information must be displayed at the point of choice for the customer, so this could be the food label, food delivery platforms or on a menu board beside the food. The aim of these regulations is to increase national efforts to tackle obesity.
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Health and Safety
Added protection for workers in the UK to be introduced from April
As mentioned in our previous Regulatory Outlook, The Personal Protective Equipment at Work (Amendment) Regulations 2022 will come into force in the UK from 6 April 2022, extending the rights under the Personal Protective Equipment at Work Regulations 1992 (PPER 1992) to include limb (b) workers.
For those businesses whose activities require PPE, they will need to carefully consider whether the change to UK law applies to them and their workforce and make the necessary preparations to comply. We have provided more details on how you can prepare for these changes in this Insight.
This change in law (addressing the issue of not fully implementing EU requirements) is also an interesting one generally around the duties of businesses for the safety of those who are employed on a contract, freelance or other similar basis. We consider this legislation change provides indication that the duty is wider than sometimes approached and may have an impact on, for instance, gig economy businesses.
Covid-19
As flagged in our previous Regulatory Outlook, the government announced its "Living with Covid" plan last month which sets out its approach to managing Covid-19 in England going forwards. Since then, the government removed all remaining travel restrictions on Friday 18 March, removing the current requirement for people entering the UK to take a test or complete a passenger location form and the need for unvaccinated passengers to take a pre-departure test and a day two post-arrival test.
We now await the promised public health guidance which will apply from 1 April when the government's current working safely guidance comes to an end. It is hoped that this new guidance will provide greater clarity on the ongoing health and safety considerations for employers, although we expect the guidance to be high level and principles based and to put the onus on an employer to assess risk and put in place appropriate and proportionate measures to manage Covid-19 in the workplace. Employers must also remain mindful of the longer term impact for those who have had Covid-19 and continue to experience ongoing associated health complications, and will also need to think in their assessments about individuals with particular vulnerabilities to the virus.
See the employment team's Employment Law Coffee Break which looks at some of the questions they have seen arising from clients with the relaxation of restrictions.
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Modern slavery
No further update this month.
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Products
New plastic packaging tax comes into force next month
As detailed in an earlier Regulatory Outlook, the new plastic packaging tax (PPT) comes into force on 1 April 2022. From this date, if you manufacture or import plastic packaging you must check if you are liable for PPT and you will have 30 days to register for the tax from the date you become liable.
We have provided more details on how to check if you are liable to this new tax in our recent Insight. You can also read government guidance which provides detailed information on how to prepare to pay the PPT.
Commission launches public consultation on revision of Toy Safety Directive
On 2 March 2022, the European Commission launched a public consultation on the revision of Directive 2009/48/EC of the European Parliament and of the Council of 18 June 2009 on the safety of toys. The reason for revising the Toy Safety Directive is that a Commission evaluation of the Directive identified several shortcomings that could compromise the health and safety of children, in particular on chemicals.
Comments can be made until 25 May 2022. The adoption of a proposal for a Regulation revising the Toy Safety Directive is planned for Q4 of 2022.
EU amendments to Proposed Batteries Regulation
The EU Parliament on 10 March 2022 adopted amendments to the proposed regulation on batteries and waste batteries, providing more onerous requirements on sustainability, performance and labelling. The main proposals are as follows:
- By 2024, portable batteries in appliances such as smartphones will need to be designed so that consumers and independent operators can easily and safely remove them themselves.
- Supply chains for batteries will be subject to increased human rights and due diligence obligations and will have to fully comply with these.
- The EU Parliament has set out the minimum levels of cobalt, lead, lithium and nickel which must be recoverable from recycled batteries, with more stringent recycling targets for portable batteries.
On 17 March 2022, the Environment Council adopted a general approach which extends the scope of the regulation to ready-made battery modules and to all electric vehicle batteries. The Council and Parliament will now start trilogue negotiations with a view to progressing towards an agreement on the final text in first reading.
Commission launches consultation on the use of hazardous substances in electronics
The European Commission, on 10 March 2022, published a consultation on revising the Restriction on Use of Hazardous Substances in Electrical and Electronic Equipment (RoHS) Directive. This consultation follows on from the call for evidence (as we noted last month). The Commission plans to transform the RoHS Directive into a regulation to reduce the unnecessary regulatory burden of transposing the Directive into different Member States. It has also set out plans to introduce and revise legislative measures such as clarifying and improving the exemption and criteria process as well as the substance restriction trigger-criteria process.
The consultation closes on 2 June 2022 and the Commission plans to adopt a proposal in Q4 2022.
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Regulated procurement
Taking account of a bidder's approach to payment
Procurement Policy Note 08/21 (PPN 08/21) "Taking account of a bidder's approach to payment in the procurement of major government contracts" comes into force on 1 April 2022, updating the guidance set out in PPN 07/20.
The revised guidance applies to in-scope public procurements with an anticipated contract value above £5 million per year, advertised on or after 1 April 2022. The new PPN provides contracting authorities with guidance on how to take into account a supplier's payment approach in the procurement of major government contracts. PPN 08/21 updates PPN 07/20 to increase the threshold bidders have to meet to demonstrate they have effective payment systems in place to ensure the reliability of their supply chains.
You can also read the PPN 08/21 FAQs which include details on how to report payment data where supply chain finance is used.
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Sanctions and Export Control
Threshold lowered for fines imposed by OFSI
See also Bribery, fraud and anti-money laundering.
Part 3 of the Economic Crime (Transparency and Enforcement) Act (that received royal assent on 15 March) creates a strict civil liability test for breaches of sanctions. The Act removes the requirement for businesses to have knowledge or a "reasonable cause to expect" that sanctions are being breached in order for monetary penalties (of up to £1m or 50% of the assets wrongfully dealt with) to be imposed. This change significantly lowers the threshold for the imposition of fines by the Office for Financial Sanctions Implementation (OFSI). In addition to this, OFSI is now permitted to publicly identify organisations that have breached sanctions but not been fined. These changes have received royal assent but have not yet entered into force.
Linked to this new legislation, the UK's National Crime Agency has announce the formation of a new "Kleptocracy" unit to assist in the investigation of sanctions breaches.
All businesses which attract overseas investment through corporate entities will need to consider amending their systems to reflect the requirements of the Act. Upgrades to processes may be necessary to ensure that they comply with these new provisions.
For more detail on this, see our Insight.
Companies House transparency reforms
Individual directors and people with significant control (PSCs) of companies, as well as those who present information for filing at Companies House, will have to verify their identities under UK government plans published on 28 February 2022.
The proposals were first consulted on in 2019 but have now been accelerated in response to the war in Ukraine. The final plans comprise a fundamental change to the purpose and role of Companies House since the creation of the role of registrar of companies in 1844. Companies House will move from being a passive administrator of company information to becoming an active gatekeeper and custodian of reliable company information.
We await an official timeline for the introduction of the legislation to implement these proposals, although reportedly they will be introduced as part of a second Economic Crime Bill in the Parliamentary session that begins in May 2022.
For more detail on this, see our Insight.
Russia sanctions regime
A large number of Russian and Belarusian entities and individuals have been newly designated as sanctions targets across the last few weeks, and more are expected. Several amendments to the underlying Regulations were made in February and March which have broadened existing sectoral measures and introduced new ones. These largely affect the Russian banking/financial sector but also affect dealing in securities or providing loans/credit to a number of Russian entities and individuals. Various licences have also been issued, covering various activities such as allowing sanctioned entities to continue to pay employees.
With sanctions being imposed by various countries across the world, businesses should be aware of how this may impact them and ensure that robust sanctions compliance measures are in place.
Further guidance can be found on the OFSI blog and across various Insights on the Sanctions, ownership and related issues page of our website.
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Telecoms
Government launches consultation on security regulations
As we previously reported, the Telecommunications (Security) Act 2021 (which came into force in November last year) grants the Secretary of State the ability to produce regulations and codes of practice that impose obligations on telecommunications companies regarding how they protect themselves from cyber threats. On 1 March 2022 the government published drafts of its proposed Electronic Communications (Security Measures) Regulations and Telecommunications Security Code of Practice, inviting feedback from the industry.
The regulations supplement the new requirements under the Act by setting out what good security of telecoms networks and services looks like to address present and future risks. They include a wide range of obligations including measures designed to reduce security compromises in network architecture, monitoring and protection of the network from external threats, security controls over network changes and governance responsibilities. Other examples of new requirements are that telecoms providers:
- put in place appropriate contractual arrangements with their suppliers which, among other things, require suppliers to identify, disclose and reduce risks of security compromises arising from the relationship;
- hold copies of network and service information that would allow them to rebuild and maintain their operations in the event of a security compromise (a copy of this information must be retained within the UK); and
- do not locate security capabilities that monitor and analyse UK networks and services in certain high-risk non-UK locations. Where providers host capabilities in other non-UK locations, they must identify and reduce the risks of security compromise occurring as a result of monitoring and analysis tools being stored on equipment in those locations.
The obligations set out in the regulations will not be applied in a blanket manner across all telecommunications companies with the code introducing three "tiers", each with varying levels of obligations and oversight:
- Tier 1 – largest national-scale providers with relevant turnover of over £1 billion;
- Tier 2 – medium size public telecoms providers with relevant turnover of more than or equal to £50 million but less than £1 billion; and
- Tier 3 – the smallest telecoms companies with relevant turnover of less than £50 million.
The code also sets out detailed technical guidance for providers on implementation of the proposed rules.
The consultation will remain open until 10 May 2022.
Ofcom launches consultation on enforcement of security regulations
Under the proposed code and regulations detailed above, Ofcom is granted new powers to monitor and enforce the obligations placed on telecommunications companies. In light of these new powers, Ofcom launched its own consultation on 8 March 2022 regarding the procedures it intends to follow when carrying out its duties.
The consultation shall remain open until 17 May 2022.
Ofcom proposes use of 6GHz band for shared access licences
Ofcom issued a consultation on 28 February 2022 inviting feedback on proposals for adding the upper 6 GHz band (6425-7070 MHz) to Ofcom’s Shared Access licence framework for low-power, indoor use. The lower 6 GHz band (5925-6425MHz) has already been made available by Ofcom for use with wi-fi but there had been some uncertainty regarding how the upper band would be made available for indoor use, not least due to impacts on future use cases such as 5G mobile still being explored.
Ofcom envisages that use of the upper 6 GHz band for indoor use could bring a number of benefits, especially in relation to industrial and research applications, such as factory robots and sensors, Augmented Reality (AR), healthcare monitors, wireless medical equipment and private network connections. While this sounds promising, it should be noted that Ofcom has stated that if it decides to authorise 5G mobile on the upper 6 GHz band it may need to revoke these licences.
This consultation will be open until 11 April 2022 and Ofcom intends to reach a final decision later in 2022.
New laws to end 'no bar blues'
The government has announced that plans to, "erase mobile coverage ‘not spots’ in rural areas and roll out next-generation 5G will be accelerated under new barrier-busting laws". The proposed reforms to planning laws come following an extensive consultation and will be implemented through amendments to the Town and Country Planning (General Permitted Development) (England) Order 2015. The reforms will enable mobile network operators to make new and existing phone masts up to five metres taller and the greater of two metres or 50% wider than current rules permit, meaning fewer masts will be required to provide the necessary coverage.
The reforms will also include "tough new legal duties" to help minimise the visual impact of network equipment, especially in "protected areas such as national parks, conservation areas, world heritage sites and areas of outstanding natural beauty".
It should be noted that as planning is a devolved policy area the reforms will apply in England only.
Huawei deadline delayed by six months
The government has launched a four week consultation regarding its restrictions on the use by public communications providers of Huawei goods and services. Of particular note in this publication is the proposed delay to the deadline for the reduction of Huawei equipment in the 5G non-core network to 35%, due to Covid-19 affecting "providers’ abilities to reconfigure their networks". The deadline which was originally set for January 2023 has now been pushed back to 31 July 2023.
Due to the "the profound security risk" there is no extension proposed for the deadline for removing Huawei equipment from Core Network Functions.
The consultation will remain open until 21 March 2022.
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