This consultation paper sets out the proposed changes to rules and policy material contained in the Prudential Regulation Authority (PRA) Handbook. It is the first, in a series of planned consultations over two years, aimed at reshaping the Handbook material inherited from the Financial Services Authority (FSA) to create a rulebook, containing PRA rules only.
Summary of the key issues covered by the consultation paper:
- proposal to replace the six Principles for Business (the Principles) inherited from the FSA with the Fundamental Rules (FRs);
- proposed changes to the rules on the PRA’s information gathering powers on its own initiative;
- proposed changes to the rules on the use of the power in section 166 (Reports by skilled persons) and section 166A (Appointment of skilled person to collect and update information) of FSMA;
- intention to update the PRA’s statement of policy on the exercise of the financial stability information power; and
- plan to move the table on the application of the Handbook to incoming EEA firms in SUP 13 Annex 1 to the PRA website.
CP 2/14 also addresses the recommendation by the Parliamentary Commission on Banking Standards (PCBS) that the Principles should be amended to include a requirement that a bank must operate in accordance with the safety and soundness of the firm and that directors’ responsibilities to shareholders are to be interpreted in the light of this requirement.
The consultation closed on 21 March 2014.