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Home > Prudential Regulation Authority > Strengthening accountability in banking and insurance: amendments and optimisations – CP34/16
 

Strengthening accountability in banking and insurance: amendments and optimisations – CP34/16

28 September 2016

​Background

In this consultation paper (CP), the Prudential Regulation Authority (PRA) sets out three sets of proposed amendments and optimisations to the Senior Managers and Certification Regime (SM&CR) and Senior Insurance Managers Regime (SIMR). 

This CP is relevant to all PRA-regulated firms, although specific chapters or sections may be relevant to either Relevant Authorised Persons or insurers only.

This CP should be read in conjunction with Financial Conduct Authority (FCA) CPs 16/26 and 16/27 which contain the FCA’s equivalent proposals for implementing the changes to the SM&CR introduced by the Bank of England and Financial Services Act 2016 (the Act).

Summary of proposals

Chapter 2 of this CP sets out the PRA’s proposals for implementing the amendments to the SM&CR and SIMR in the Act and includes:

  • setting out the PRA’s expectations on the duty of responsibility;
  • applying certain Conduct Rules/Conduct Standards to those non-executive directors (NEDs) who are not approved persons under the SMR and SIMR; and
  • a minor, technical change to the PRA’s Statement of Policy (SoP) on Conditions, time limits and variations of approval.

Chapter 3 of this CP sets out the PRA’s proposed optimisations for the SM&CR, which include:

  • creating a new PRA Senior Management Function (SMF), the Chief Operations function (SMF23), which will bring the individual with overall responsibility for managing, and ensuring the operational continuity and resilience of, the internal operations, systems and technology of a firm;
  • creating a new PRA Prescribed Responsibility for managing, and ensuring the operational continuity and resilience of, the internal operations, systems and technology of a firm;
  • inserting additional criteria to the definition of the Head of Key Business Area function (SMF6) to supplement the existing quantitative thresholds in rule 3.6 of the Senior management Functions Part of the PRA Rulebook; and
  • clarifying the PRA’s expectations of Statements of Responsibilities (SoRs) and Management Responsibilities Maps (MRMs).

Chapter 4 of this CP sets out the PRA’s proposed optimisations for the SIMR, which include:

  • a streamlined regime for firms in run-off; and
  • tailored required for small, less complex insurers that elect to outsource their internal audit function (mirroring with certain differences the requirements for RAPs in rule 4.2(3) of the Allocation of Responsibilities Part of the PRA Rulebook.

Responses

This consultation closed on Monday 9 January 2017. The PRA invites feedback on the proposals set out in this consultation. Please address any comments or enquiries to CP34_16@bankofengland.co.uk.

Consultation paper

The CP including appendices runs to 199 pages. To be helpful to readers the PRA has attached a complete, and split, version.

Complete version
Strengthening accountability in banking and insurance: amendments and optimisations – CP34/16 (complete) (2.3 MB)

Consultation paper 
Strengthening accountability in banking and insurance: amendments and optimisations – CP34/16

Appendices

  1. Draft instrument PRA RULEBOOK: CRR FIRMS, NON CRR FIRMS: SENIOR MANAGERS REGIME AMENDMENT (NO.X) INSTRUMENT [DATE]
  2. Draft instrument PRA RULEBOOK: SOLVENCY II FIRMS, NON SOLVENCY II FIRMS: SENIOR INSURANCE MANAGERS REGIME AMENDMENT (NO.2) INSTRUMENT [DATE]
  3. Draft revised Supervisory Statement 28/15 – Strengthening individual accountability in banking
  4. Draft revised Supervisory Statement 35/15 – Strengthening individual accountability in insurance
  5. Draft forms
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