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    PRA Proposes Reporting and Rulebook Changes Under CRDIV and SolvencyII

    October 07, 2019

    PRA published an occasional consultation paper (CP25/19) that proposes minor amendments to the PRA Rulebook Parts, supervisory statements, statements of policy (SoPs), and the relevant templates. The proposed changes fall under the Solvency II and Capital Requirements Directive (CRD IV). Among other changes, CP25/19 consults on minor updates and corrections to certain Capital+ and ring-fenced body reporting templates, which is covered under Chapter 4 of CP25/19. The consultation period for Chapter 4 of CP25/19 closes on November 18, 2019 while the consultation period for the remaining chapters closes on December 09, 2019.

    The proposals in CP25/19 are included in the following five chapters:

    • In chapter 2, PRA sets out proposals to update SS20/15 on supervising building societies’ treasury and lending activities (Appendix 1) and Statement of Policy on the methodologies for setting Pillar 2 capital (Appendix 2) to remove references to the London Inter-Bank Offered Rate (LIBOR).
    • In chapter 3, PRA sets out proposals to update redundant references and make minor corrections to SS28/15 on strengthening individual accountability in banking (Appendix 3) and SS35/15 on strengthening individual accountability in insurance (Appendix 4).
    • In chapter 4, PRA sets out proposals to amend the Regulatory Reporting Part of the PRA Rulebook (Appendix 5), Capital+ reporting templates (PRA101 and PRA102) (Appendix 6), and ring-fenced body reporting templates (RFB003, RFB004, and RFB008) (Appendix 6).
    • In chapter 5, PRA sets out proposals in relation to retirement interest-only (RIO) mortgages as well as certain interest-only (IO) mortgages that are converted into RIO mortgages. The proposals would result in amendments to SS11/13 on the internal ratings based (IRB) approaches (Appendix 8) and SS10/13 on the standardized approach for credit risk (Appendix 9).

    Subject to the PRA consideration of responses to  CP25/19, the proposed implementation dates are the same date as publication of the final policy for Chapters 2 and 3 and the date as set out in Appendix 5 for Chapter 4. Furthermore, for Chapter 5, PRA proposes that firms should implement the proposed changes by December 31, 2020, to align with the proposed implementation date of the relevant EBA guidelines, as set out in CP21/19 on probability of default and loss given default estimation.

    The proposals have been designed in the context of the current UK and EU regulatory framework. PRA will keep the policy under review to assess whether any changes would be required due to changes in the UK regulatory framework, including those arising once any new arrangements with EU take effect. Each chapter in CP25/19 sets out the PRA assessment of whether the proposals would need to be amended under the European Union (Withdrawal) Act 2018.

     

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    Keywords: Europe, UK, Banking, Insurance, Reporting, PRA Rulebook, Solvency II, CRD IV, Capital+, IRB Approach, Pillar 2, CP25/19, Credit Risk, Ring Fencing, PRA

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