The Prudential Regulation Authority is required under the Financial Services and Markets Act 2000 (as amended by the Financial Services (Banking Reform) Act 2013) to make policy to implement the ring-fencing of core UK financial services and activities.
This policy statement will be of interest to banks which will be required to ring-fence their core activities. This will include banking groups with core deposits greater than £25 billion. It will also be of interest to financial and other institutions and customers who have dealings with ring-fenced bodies.
Content of the policy statement
The policy statement provides feedback on the responses received to Consultation Paper 19/14 published in October 2014, and the amendments to the draft rules and supervisory statements included in CP19/14. The policy statement covers three areas:
- legal structure arrangements of banking groups subject to ring-fencing;
- governance arrangements of ring-fenced bodies; and
- arrangements to ensure continuity of services and facilities to ring-fenced bodies.
The PRA does not consider that the responses to the consultation necessitate major changes to its proposed approach to implementing ring-fencing. But the PRA has made a number of amendments to the draft rules and supervisory statements published in CP19/14, mainly to add clarity and certainty. Updated ‘near final’ versions of the rules and supervisory statements are included in the policy statement.
The Government has stated its intention for ring-fencing to take effect from 1 January 2019. The PRA intends to undertake a further consultation during 2015, and to publish final rules and supervisory statements covering the policy proposed in these two consultations during 2016 H1, to provide firms with sufficient time for implementation. The PRA’s ‘Structural reform’ webpage summarises development to date and what’s coming up on policy and implementation of the new regimes – see Related Links.
The implementation of ring-fencing: legal structure, governance and the continuity of services and facilities - PS10/15