PRA Publishes Discussion Paper on Its Future Approach to Policy
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.
Related Links
Keywords: Europe, UK, Banking, Insurance, Regulation and Supervision, Financial Services and Markets Bill, Future Regulatory Framework, Proportionality, Regulatory Framework, Regtech, Basel, IFPR, PRA
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Related Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
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).
Asian Governments Aim for Interoperability in AI Governance Frameworks
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.
EBA Proposes Operational Risk Standards Under Final Basel III Package
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.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
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.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.