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Home > Prudential Regulation Authority > Proactive intervention framework

Proactive intervention framework

Assessing risk  |  Information for smaller firms  |  Mitigating risk  |  Proactive intervention framework  Regulation of insurance

Supervisors consider a firm’s proximity to failure when drawing up its supervisory plan, given the possible adverse effects of disorderly firm failure on its objectives. The Prudential Regulation Authority’s (PRA) judgement about proximity to failure is captured in a firm’s position within the Proactive Intervention Framework (PIF).

The PIF is designed to ensure that the PRA puts into effect its aim to identify and respond to emerging risks at an early stage. There are five clearly demarcated PIF stages, each denoting a different proximity to failure, and every firm sits in a particular stage at each point in time. A firm's PIF stage is reviewed at least annually and in response to relevant material developments.

As a firm moves to a higher PIF stage - ie as the PRA determines that the firm’s viability has deteriorated - supervisors will review their supervisory actions accordingly. Senior management of the firm will be expected to ensure appropriate remedial action is taken to reduce the likelihood of failure. And the authorities will ensure appropriate preparedness for resolution.   
Five stages of the PIF
Diagram of the five stages of the PIF

In June 2014, the PRA published aggregated PIF scores - see Key Resources.