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

    Regulators Fine Goldman Sachs for Risk Management Failures

    FCA and PRA in the UK, FED in the US, and the authorities in Singapore have fined Goldman Sachs for risk management failures in connection with the 1Malaysia Development Berhad (1MDB).

    October 23, 2020 WebPage Regulatory News
    News

    Canada Hosts International Conference of Banking Supervisors

    BCBS announced that OSFI and the Bank of Canada hosted the 21st International Conference of Banking Supervisors (ICBS) virtually on October 19-22, 2020.

    October 22, 2020 WebPage Regulatory News
    News

    FCA Proposes More Measures to Help Insurance Customers Amid Crisis

    FCA proposed guidance on how firms should continue to seek to help customers who hold insurance and premium finance products and may be in financial difficulty because of COVID-19, after October 31, 2020.

    October 21, 2020 WebPage Regulatory News
    News

    EBA Issues Opinion to Address Risk Stemming from Legacy Instruments

    EBA issued an opinion on prudential treatment of the legacy instruments as the grandfathering period nears an end on December 31, 2021.

    October 21, 2020 WebPage Regulatory News
    News

    ESRB Publishes Non-Bank Financial Intermediation Risk Monitor for 2020

    ESRB published the fifth issue of the EU Non-bank Financial Intermediation Risk Monitor 2020 (NBFI Monitor).

    October 21, 2020 WebPage Regulatory News
    News

    HM Treasury Publishes Policy Statement Amending Benchmarks Regulation

    HM Treasury announced that the new Financial Services Bill has been introduced in the Parliament.

    October 21, 2020 WebPage Regulatory News
    News

    APRA Initiates Action Against a Bank for Liquidity Compliance Breach

    APRA announced that it has increased the minimum liquidity requirement of Bendigo and Adelaide Bank for failing to comply with the prudential standard on liquidity.

    October 21, 2020 WebPage Regulatory News
    News

    PRA Consults on Implementation of Certain Provisions of CRD5 and CRR2

    PRA published the consultation paper CP17/20 to propose changes to certain rules, supervisory statements, and statements of policy to implement elements of the Capital Requirements Directive (CRD5).

    October 20, 2020 WebPage Regulatory News
    News

    US Agencies Finalize Rule to Reduce Impact of Large Bank Failures

    US Agencies adopted a final rule that applies to advanced approaches banking organizations and aims to reduce interconnectedness in the financial system as well as to reduce contagion risks associated with the failure of a global systemically important bank (G-SIB).

    October 20, 2020 WebPage Regulatory News
    News

    US Agencies Finalize Rule on Net Stable Funding Ratio Requirements

    US Agencies (FDIC, FED, and OCC) adopted a final rule that implements the net stable funding ratio (NSFR) for certain large banking organizations.

    October 20, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 6004