The Prudential Regulation Authority (PRA) proposed its approach to policy-making as it takes on wider rulemaking responsibilities under the Financial Services and Markets Bill. PRA is requesting comments on the discussion paper until December 08, 2022.
The Financial Services and Markets Bill will implement the outcomes of the Future Regulatory Framework Review, which was established by the UK government to consider how the financial services regulatory framework in UK should adapt for the future and in particular to reflect the UK’s position outside of the European Union. The proposals in the discussion paper have been developed based on the Financial Services and Markets Bill as it was introduced in Parliament on July 20, 2022. The discussion paper focusses on how PRA proposes to make policy and communicate with its stakeholders, along with its aspirations for the PRA Rulebook. It is not about the substance of specific policies. In particular, the discussion paper:
- describes the framework of objectives and regulatory principles within which PRA currently operates, and how it will change after the Financial Services and Markets Bill 2022 receives Royal Assent.
- describes the approach that PRA takes to pursuing its objectives, including early thinking on how it will approach the new secondary objective introduced in the Financial Services and Markets Bill. It also describes the PRA’s approach to considering regulatory principles.
- describes why and how PRA engages internationally to pursue its objectives, including through the development and implementation of international standards. It discusses how the integration of the global financial system benefits the UK financial system while also creating risks, and sets out how PRA responds to these risks. It also describes how PRA takes an outcomes based approach to “equivalence” advice.
- describes PRA’s approach to creating and maintaining prudential policy framework. Much of this will remain consistent with the current approach, though the discussion paper also outlines areas where this approach will change – for instance, in relation to stakeholder engagement.
- outlines the PRA’s ambition to deliver a first-rate Rulebook for the UK, by moving towards a more accessible, usable, efficient, and clearer set of policies. It summarizes four key reforms which are consistent with this outcome. The full implementation of the reform aspirations depends upon when the repeal of retained EU law takes effect, and when rules are made to replace it.
After analyzing responses to the discussion paper, PRA will publish a consultation paper, followed by a final publication on its policy approach. This final publication will be the policy equivalent of the PRA approach to supervision publications.
Keywords: Europe, UK, Banking, Insurance, Regulation and Supervision, Financial Services and Markets Bill, Future Regulatory Framework, Proportionality, Regulatory Framework, Regtech, Basel, IFPR, PRA
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
The use cases of generative AI in the banking sector are evolving fast, with many institutions adopting the technology to enhance customer service and operational efficiency.
As part of the increasing regulatory focus on operational resilience, cyber risk stress testing is also becoming a crucial aspect of ensuring bank resilience in the face of cyber threats.
A few years down the road from the last global financial crisis, regulators are still issuing rules and monitoring banks to ensure that they comply with the regulations.
The European Commission (EC) recently issued an update informing that the European Council and the Parliament have endorsed the Banking Package implementing the final elements of Basel III standards
The Swiss Federal Council recently decided to further develop the Swiss Climate Scores, which it had first launched in June 2022.