Featured Product

    PRA Finalizes Policy on Approach to Managing Climate Change Risks

    April 15, 2019

    PRA published the policy statement PS11/19, which contains final supervisory statement (SS3/19) on enhancing banks’ and insurers’ approaches to managing the financial risks from climate change (Appendix). PS11/19 also provides feedback to responses to the consultation paper (CP23/18) on banks’ and insurers’ approaches to managing the financial risks from climate change. Additionally, PRA published a speech by Sarah Breeden, Executive Director for International Banks Supervision at PRA, on how the financial risks from climate change are far-reaching, foreseeable, and require immediate action.

    PS11/19 is relevant to all UK insurance and reinsurance firms and groups within the scope of Solvency II and non-Solvency II firms (collectively referred to as insurers), banks, building societies, and PRA-designated investment firms. The comment period for the consultation on climate change risks (CP23/18) ended on January 15, 2019. PRA had received 54 responses and the respondents generally welcomed the proposals in CP23/18. In addition to some respondents urging PRA to move more quickly and decisively on climate change issues, there were a number of requests for clarification. Feedback to these responses has been set out in Chapter 2 of PS11/19. After considering the comments received, PRA has made the following changes to the expectations in the SS3/19:

    • Provided more clarity on the timescales appropriate for scenario analysis
    • Updated the wording of the disclosure expectations in response to requests for clarification
    • Clarified that financial positions related to climate vulnerable assets cannot always be hedged; thus, firms should not rely on that assumption

    SS3/19 describes the two risk factors through which financial risks from climate change arise and the distinctive elements which, when considered together, present unique challenges and require a strategic approach. Chapter 3 of SS3/19 sets out the PRA expectations concerning this strategic approach. The expectations in SS3/19 take effect on publication of this PS11/19. PRA expects firms to have an initial plan in place to address the expectations and submit an updated Senior Management Function (SMF) form by October 15, 2019. However, firms should note that expectations on firms and SMF holder(s) will take into consideration the evolving understanding of what best practice looks like. PRA intends to publish more detailed expectations in due course.

    PRA and FCA have established the Climate Financial Risk Forum (CFRF), with the aim of supporting the integration of climate-related factors into financial decision making, for example, by developing analytical tools and techniques. The policy set out in PS11/19 has been designed in the context of the existing U.K. and EU regulatory framework. PRA has assessed that the policy will not be affected in the event that UK leaves EU with no implementation period in place.

     

    Related Links

    Effective Date: April 15, 2019 (SS3/19)

    Keywords: Europe, UK, Banking, Insurance, Climate Change Risks, PS11/19, CP23/18, SS3/19, PRA

    Featured Experts
    Related Articles
    News

    BoE Consults on Approach to Setting MREL, Publishes Bail-In Guidance

    The Bank of England (BoE) published a consultation paper on approach to setting minimum requirement for own funds and eligible liabilities (MREL), an operational guide on executing bail-in, and a statement from the Deputy Governor Dave Ramsden.

    July 22, 2021 WebPage Regulatory News
    News

    EBA Seeks Views on Proportionality Assessment Methodology

    The European Banking Authority (EBA) is seeking preliminary input on standardization of the proportionality assessment methodology for credit institutions and investment firms.

    July 22, 2021 WebPage Regulatory News
    News

    US Agencies Propose Changes to Call Reports and Instructions

    Certain regulatory authorities in the US are extending period for completion of the review of certain residential mortgage provisions and for publication of notice disclosing the determination of this review until December 20, 2021.

    July 22, 2021 WebPage Regulatory News
    News

    PRA Finalizes Rulebook Definition of Higher Paid Material Risk-Taker

    The Prudential Regulation Authority (PRA) published the policy statement PS18/21, which introduces an amendment in the definition of "higher paid material risk taker" in the Remuneration Part of the PRA Rulebook.

    July 21, 2021 WebPage Regulatory News
    News

    EBA Examines Asset Encumbrance in Banking Sector

    The European Banking Authority (EBA) published its annual report on asset encumbrance in banking sector.

    July 21, 2021 WebPage Regulatory News
    News

    EBA Publishes Methodological Guide to Mystery Shopping

    The European Banking Authority (EBA) published a methodological guide to mystery shopping.

    July 21, 2021 WebPage Regulatory News
    News

    APRA Issues Update on Capital Reform Policy Settings for Banks

    The Australian Prudential Regulation Authority (APRA) released a letter to authorized deposit-taking institutions to provide an update on key policy settings for the capital framework reforms, which will come into effect from January 01, 2023.

    July 21, 2021 WebPage Regulatory News
    News

    CPMI-IOSCO Assess Continuity Planning of Market Infrastructures

    The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) published a report that assesses the business continuity planning activities of financial market infrastructures or FMIs.

    July 21, 2021 WebPage Regulatory News
    News

    BoE Announces Changes to Validation Rules for Form BTL

    The Bank of England (BoE) published questions and answers (Q&A) on OSCA to BEEDS migration for statistical reporting as well a presentation from the project overview session held with statistical reporters.

    July 20, 2021 WebPage Regulatory News
    News

    BCBS Proposes Changes to Process for Reviewing G-SIB Methodology

    The Basel Committee on Banking Supervision (BCBS) is consulting on a technical amendment to the Basel Framework to reflect a new process reviewing the global systemically important bank (G-SIB) assessment methodology.

    July 20, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7281