Featured Product

    PRA Publishes Business Plan for 2020-21

    April 09, 2020

    PRA published the Business Plan for 2020-21. This document presents the workplan for each strategic goal of PRA and details the highest-level actions taken to mitigate the impact of COVID-19 on the PRA-regulated firms. The strategy of PRA is to deliver a resilient financial sector by seeking an appropriate quantity and quality of capital and liquidity, effective risk management, robust business models, and sound governance, including clear accountability of firms’ management. Alongside the Business Plan, PRA also published a consultation paper (CP4/20) that explains how it proposes to fund its budget.

    PRA strategy outlines its intentions over the medium to long-term, with the following key strategic goals:

    • Robust prudential standards and supervision—Have in place robust prudential standards and hold regulated firms, and those who run them, accountable for meeting these standards. In 2020-21, PRA will focus on maintaining robust prudential standards and support the Financial Policy Committee’s (FPC) commitment to uphold the same level of resilience, to ensure continuity in the supply of vital financial services to the real economy throughout the cycle, including after severe shocks.
    • Adapt to market changes and horizon scanning—PRA will seek to maintain the dynamic resilience of the regulatory framework by scanning the horizon for emerging and evolving risks; evaluating the functioning of the framework for unintended consequences; and, where appropriate, intervening to make adjustments in response to these. Over the coming year, the areas that have been identified to be of particular interest include climate change risks, fintech, digital currencies, regtech, and application of artificial intelligence and machine learning.
    • Financial resilience—In the coming year, PRA will assess the adequacy of capital and liquidity resources of firms in the banking sector through a range of measures. PRA will continue to assess credit risk and asset quality and to consider the level and drivers of risk-weighted assets. Technical risk reviews, including internal models of firms, liquidity and capital assessments, and scrutiny of regulatory returns and other data, will remain core parts of the PRA work to ensure that firms are adequately capitalized and have sufficient liquidity. PRA also intends to consult on enhancing the internal capital adequacy assessment process (ICAAP) review process for mid-sized UK banks and building societies from 2020 and to continue engaging with relevant firms to take this forward. Additionally, in 2020, PRA will finalize and publish a supervisory statement on its expectations of firms’ implementation of the Prudent Person Principle (PPP) in Solvency II.
    • Operational resilience—Develop the supervision of operational resilience to mitigate the risk of disruption to the provision of important business services.
    • Recovery and resolution—Ensure that banks and insurers have credible plans in place to enable them to recover from stress events and that firms work to remove barriers to their resolvability to support the management of failure—proportionate to the firm’s size and systemic importance—in an orderly manner. PRA will continue to progress the work to end "too big to fail."
    • Brexit—Deliver a smooth transition to a sustainable and resilient UK financial regulatory framework following the exit of UK from EU. In the insurance sector, PRA will take forward work on the risk margin, regulatory data, and the appropriate calibration of the matching adjustment. Also, PRA will ensure a smooth transition to the risk-free rate calculation and will develop capabilities to independently produce all the various Solvency II risk-free rate components. In the banking sector, PRA will continue to monitor any risks presented by firms’ business models and governance as a result of restructuring their activities to accommodate the withdrawal of UK from  EU.
    • Efficiency and effectiveness—Strive to maintain the level of financial resilience of the banking and insurance sectors to be at least as high as it is today and work closely with these sectors to support their resilience while measures to prevent the spread of COVID-19 affect the business. PRA will endeavor to maintain a risk-aware, post-crisis culture in the firms, while embracing new technologies to improve its efficiency and effectiveness as a regulator and delivering greater benefits to financial services firms. PRA also plans to carryg out a discussion with firms to transform data collection from the UK financial sector over the next decade, seeking ways to decrease the burden on industry and to increase the timeliness and effectiveness of data in supporting supervisory judgments. BoE and PRA issued a discussion paper in January 2020, setting out a range of potential options drawing on ideas explored in the BoE response to the Future of Finance report (published in June 2019) and in the pilot on digital regulatory reporting. BoE and PRA plan to carry out direct stakeholder engagement during 2020, where possible in light of Covid-19, including bilateral meetings, round-table events, webinars, and industry working groups, some of which will be run jointly with FCA as the regulators continue to work closely together to ensure that reforms to data collection are aligned. 

     

    Related Links

    Keywords: Europe, UK, Banking, Insurance, Business Plan, COVID-19, Fintech, Regtech, Climate Change Risk, Recovery and Resolution, Brexit, Regulatory Capital, Operational Resilience, Solvency II, Reporting, PRA

    Featured Experts
    Related Articles
    News

    APRA Sets LAC for D-SIBs, Proposes to Enhance Crisis Preparedness

    APRA issued a letter on the loss-absorbing capacity (LAC) requirements for domestic systemically important banks (D-SIBs) and published a discussion paper, along with the proposed the prudential standards on financial contingency planning (CPS 190) and resolution planning (CPS 900).

    December 02, 2021 WebPage Regulatory News
    News

    EC to Review Macro-Prudential Rules while ESRB Assesses Policy Stance

    The European Commission (EC) launched a call for evidence, until March 18, 2022, as part of a comprehensive review of the macro-prudential rules for the banking sector under the Capital Requirements Regulation (CRR) and Directive (CRD IV).

    December 01, 2021 WebPage Regulatory News
    News

    FSB Sets Out Good Practices for Crisis Management Groups

    The Financial Stability Board (FSB) published a report that sets out good practices for crisis management groups.

    November 30, 2021 WebPage Regulatory News
    News

    APRA Penalizes Heritage Bank for Incorrect Reporting of Capital

    The Australian Prudential Regulation Authority (APRA) found that Heritage Bank Limited had incorrectly reported capital because of weaknesses in operational risk and compliance frameworks, although the bank did not breach minimum prudential capital ratios at any point and remains well-capitalized.

    November 29, 2021 WebPage Regulatory News
    News

    OSFI Releases Annual Report 2021-2022

    The Office of the Superintendent of Financial Institutions (OSFI) released the annual report for 2020-2021.

    November 29, 2021 WebPage Regulatory News
    News

    OSFI Updates Timeline for Implementation of Certain Basel Rules

    Through a letter addressed to the banking sector entities, the Office of the Superintendent of Financial Institutions (OSFI) announced deferral of the domestic implementation of the final Basel III reforms from the first to the second quarter of 2023.

    November 29, 2021 WebPage Regulatory News
    News

    EC Defers Adoption of Regulatory Standards for Disclosures Under SFDR

    EIOPA recently published a letter in which EC is informing the European Parliament and Council that it could not adopt the set of draft regulatory technical standards for disclosures under the Sustainable Finance Disclosure Regulation (SFDR) within the stipulated three-month period, given their length and technical detail.

    November 29, 2021 WebPage Regulatory News
    News

    FCA Releases MIFIDPRU Application Forms and Third Set of Rules on IFPR

    The Financial Conduct Authority (FCA) published the third in a series of policy statements that set out rules to introduce the UK Investment Firm Prudential Regime (IFPR), which will take effect on January 01, 2022.

    November 29, 2021 WebPage Regulatory News
    News

    APRA Finalizes Capital Adequacy Standards for Banks

    The Australian Prudential Regulation Authority (APRA) published, along with a summary of its response to the consultation feedback, an information paper that summarizes the finalized capital framework that is in line with the internationally agreed Basel III requirements for banks.

    November 29, 2021 WebPage Regulatory News
    News

    CPMI-IOSCO Seek Comments on Access to Central Clearing and Portability

    The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) issued a consultative report focusing on access to central counterparty (CCP) clearing and client-position portability.

    November 29, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7751