Legal and regulatory developments to stay ahead of in 2023
As 2023 gets underway, several forces – from geopolitical tensions and high energy prices to rapidly increasing interest rates – are shaking the global economy to its core. How will these and other issues, such as climate change and the ongoing implications of Brexit, continue to impact the legal and regulatory landscape? What legal and regulatory developments are on the horizon for 2023?
To help you track the developments that lie ahead, we provide a snapshot of 8 key issues and trends that in-house legal teams in the UK need to monitor across practice areas. As always, Obelisk Support is here to support you should you need additional legal resources or specialised skills to understand and manage new risks or requirements.
#1 Bill of Rights
In 2022, the UK government announced a reform of the Human Rights Act and the introduction of a modern Bill of Rights to “reinforce our freedoms under the rule of law, but also provide a clearer demarcation of the separation of powers between the courts and Parliament”.
While Dominic Raab stated that the bill will “strengthen our traditions of liberty and free speech” and “restore public confidence in the justice system”, former Law Society president, I. Stephanie Boyce, expressed concerns that dismantling the Human Rights Act, which protects the rights and freedoms of people in the UK, “will have far-reaching consequences, conferring greater unfettered power not just on the government of today, but also on future ruling parties, whatever their ideology.”
It remains to be seen whether the changes will unravel decades of legislation or be considered carefully enough to protect the human rights of all who live in the UK.
#2 Employment Law
Another key area to watch will be the impact of the Brexit Freedoms Bill – now the Retained EU Law (Revocation and Reform) Bill – on long-standing employment rights in the UK.
Unless the government addresses this before the end of the year, the Bill provides for the automatic expiry of the majority of retained EU law on 31 December 2023, including TUPE, the Working Time Regulations, and protections for fixed term and part-time employees. At the time of publishing, no policy has been publicised clarifying what might replace these regulations, creating uncertainty for organisations and employers.
#3 Corporate governance and audit reform
The UK government is focused on strengthening the framework for major companies and the way they are audited. A 2021 BEIS consultation paper set out major reforms to the UK’s audit, corporate reporting, and corporate governance systems. The proposals, in response to earlier reviews, include plans to consult with the FRC on changes to the Corporate Governance Code and supporting guidance, potentially implementing reforms through secondary legislation and amended Listing Rules.
The government is due to publish a draft Audit Reform Bill, which is expected to focus on the establishment of an Audit, Reporting and Governance Authority (ARGA) to replace the FRC, measures to open up the audit market, and more.
#4 Financial services and markets
The Financial Services and Markets Bill 2022-23 (FSM Bill), expected to receive Royal Assent this year, will set the legislative framework for the revocation of all EU retained law relating to financial services. This critical piece of legislation gives the UK the opportunity to improve consumer protection and create a more competitive financial services sector post-Brexit, governed by more relevant regulatory standards.
The Bill includes changes to the regulatory framework for financial services and reform of the regime for wholesale capital markets. Key issues addressed include fraud and access to cash. It could take several years to complete the process of revoking retained EU law. However, some legislation, such as the UK Prospectus Regulation, may be revoked this year as part of the capital market regime reforms.
#5 Competition and class action
Last year, there was intense regulatory focus on competition law in the technology sector, with greater scrutiny of mergers and a drive to keep pace with the rapidly evolving digital landscape. This trend looks set to continue in 2023 and beyond.
At the same time, competition class action lawsuits are on the rise in the UK and EU, often targeting large technology companies. One example is a £768 million collective action suit against Apple Inc. in the UK on behalf of close to 25 million iPhone users. Market researcher Justin Gutmann has applied to the Competition Appeal Tribunal for approval, alleging Apple misled customers with an undocumented power management tool that slowed down the performance of older phones without warning.
#6 Data protection
The need for robust data protection will continue to be critical in our digitised society and economy. The Data Protection Act 2018 has kept the EU’s GDPR in UK law; and the EU confirmed in 2021 that the UK’s post-Brexit data protection regime has an “essentially equivalent level of protection” to its own. This will be valid until 2025 unless UK law deviates significantly from GDPR.
The UK Data Protection and Digital Information Bill, which proposed a risk-based approach that would reduce certain requirements of GDPR on businesses, was withdrawn from Parliament by the new Government in September 2022. However, the gist of these proposals may still be implemented in the near future. Should the new risk-based approach diverge substantially from the EU regime, this would create further legal complexity, burdens, and costs for organisations operating in both the UK and EU.
#7 Environmental and social governance (ESG)
A report by the Grantham Institute, which investigates global trends in climate change litigation, reveals that climate change-related cases have more than doubled since the Paris Agreement. This trend is impacting not just companies but also business leaders in the UK. A landmark case brought by ClientEarth against Shell PLC’s 13 executive and non-executive directors seeks to hold these individuals personally liable for failing to adopt and implement a climate strategy that aligns with the Paris Agreement. This could be a catalyst for further ESG related cases.
According to the Institute, five key areas to watch are: “cases involving personal responsibility; cases challenging commitments that over-rely on greenhouse gas removals or ‘negative emissions’ technologies; cases focused on short-lived climate pollutants; cases explicitly concerned with the climate and biodiversity nexus; and strategies exploring legal recourse for the ‘loss and damage’ resulting from climate change.”
At the same time, the crackdown on “greenwashing” – where organisations make unsubstantiated claims about their ESG credentials – is expected to continue. This follows the launch of the Competition and Markets Authority (CMA)’s first investigations under the Green Claims Code into eco-friendly and sustainability claims made by ASOS, Boohoo, and George at Asda about their fashion products.
#8 The metaverse
The metaverse – a virtual realm in which people can work, play, and interact – is expected to give rise to novel legal issues in 2023 and beyond. One key feature of the metaverse that could cause legal complexity is the concept of interoperability, which allows users to move their identities, digital assets, and data from one area of the metaverse to another. That could essentially mean moving these properties between applications owned and operated by different parties. This could be made possible by blockchain technologies, which could create legal implications in the areas of data security and privacy, IP, and copyright. As the applications of the metaverse continue to evolve, so too will the legal and regulatory challenges.
We’re here to support you
As you get to grips with these and other developments in the legal and regulatory landscape, you may need additional support and specialist expertise to manage new projects and growing workloads. Obelisk Support’s highly-experienced, flexible legal consultants are here to support you and help you embrace new opportunities to deliver value in 2023.