Skip to main content
  • This website sets cookies on your device. To find out more about how we use cookies please refer to our Privacy and Cookie Policy. By continuing to use the site, we’ll assume that you are content for us to set these on your device.
  • Close
Home > Prudential Regulation Authority > Structural reform
 

Structural reform

Latest news

October 2017

On Wednesday 18 October, the PRA published updated details of banks’ ring-fencing transfer scheme court dates, available below:
 

 Ring-fencing transfer schemes - dates for banks' court directions hearings

September 2017

On Monday 18 September 2017 the Bank published a public working draft (PWD) of the standalone ring-fencing taxonomy that will make up part of v3.0 of the Bank of England Banking XBRL Taxonomy, alongside related technical artefacts. This follows Policy Statement 3/17 ‘The implementation of ring-fencing: reporting and residual matters – responses to CP25/16 and Chapter 5 of CP36/16’. See the Taxonomy webpage for more information. The PRA also confirms that the GABRIEL system will be used to collect ring-fencing reporting data.

On Friday 15 September, the PRA published details of banks' ring-fencing transfer scheme court dates. This was updated on Wednesday 18 October, and is available above.

For more information see 'Implementation' below.

July 2017

On Thursday 20 July, the PRA published Policy Statement 19/17 ‘Responses to CP2/17 ‘Occasional Consultation Paper’’ which includes policy on ring-fencing, including updated RFB001 to RFB008 templates and instructions.

June 2017

On 16 June, the PRA published ‘Putting up a fence’ – a speech by James Proudman, Executive Director of UK Deposit-Takers Supervision. This includes information about ‘What is ring-fencing?’

April 2017

On 28 April, the PRA issued PS10/17 ‘Ensuring operational continuity in resolution: reporting requirements’. The PS contains new PRA109 template and instructions, available on the CRD firms – Reporting Requirements webpage and an updated SS34/15 ‘Guidelines for completing regulatory reports’.

February 2017

On Thursday 16 February, the PRA published Consultation Paper 2/17 ‘Occasional Consultation Paper’, which includes proposals on reporting requirements for ring-fenced bodies.

On 1 February, the PRA issued PS3/17 ‘The implementation of ring-fencing:
reporting and residual matters – responses to CP25/16 and Chapter 5 of CP36/16’
. The PS provides feedback on responses received to CP25/16 ‘The implementation of ring-fencing: reporting and residual matters’. It also provides feedback on responses received to Chapter 5 ‘Ring-fencing – consequential and reporting amendments’ of CP36/16 ‘Occasional Consultation Paper’. The PS includes final rules and supporting policy documents, which are available on the ‘Supporting materials – ring-fencing’ webpage and take effect from 1 January 2019.

December 2016

On 5 December the PRA published Statement of Policy 'The PRA's approach to implementation of the systemic risk buffer', following Consultation Paper 27/16 'The PRA's implementation of the systemic risk buffer'

October 2016

On 11 October the PRA issued Consultation Paper 36/16 ‘Occasional Consultation Paper’. Chapter 5 covers amendments to the ring-fencing rules and reporting requirements that the PRA is proposing following HM Treasury’s publication of amendments to the ring-fencing secondary legislation in July 2016 (see External Links). The consultation closes on Monday 12 December 2016.
 

July 2016

On 29 July the PRA issued two consultation papers on: i) operational continuity reporting requirements; and ii) its implementation of the systemic risk buffer.

 
On 7 July the PRA issued a consultation paper (CP) and two policy statements (PS):
The final policy in the PSs led to consequential updates to other publications; see structural reform and operational continuity publications - 7 July 2016 for more information. For the latest information on the implementation of ring-fencing see ‘Plans for implementing ring-fencing’ below.
 
Structural reform authorisations - to support the implementation of ring-fencing the PRA has created a new section for Structural reform - authorisations. This includes a webpage with information on how ring-fenced bodies can apply to the PRA to request permission to indirectly access inter-bank payment systems, as referred in PS20/16.

 

May 2016

On 26 May the Financial Policy Committee published its framework for the Systemic Risk Buffer (SRB), which applies to ring-fenced banks and large building societies. The FPC supplemented the SRB framework with a recommendation that states that ‘The FPC recommends to the PRA that it should seek to ensure that, where systemic buffers apply at different levels of consolidation, there is sufficient capital within the consolidated group, and distributed appropriately across it, to address both global systemic risks and domestic systemic risks’. The PRA will consult on its implementation of the FPC’s SRB framework later this year.

March 2016

On 4 March the PRA published final policy on its approach to ring-fencing transfer schemes. Details on the skilled person application are also now available – see links below.

January 2016

On 29 January the Bank published a consultation paper on the Financial Policy Committee's framework for the systemic risk buffer, including its application to ring-fenced banks. See link below for more information.

The Financial Policy Committee's Framework for the Systemic Risk Buffer (SRB)

December 2015  

On 11 December the PRA published an addendum to Consultation Paper 38/15 ‘Ensuring operational continuity in resolution’. This addendum clarifies the scope of application of the PRA’s proposals in CP38/15.  See ‘Policy development’ for a link to the update.
 
Note:  CP38/15 is one of two consultation papers published in October 2015 as part of post crisis reforms to enhance the resilience and resolvability of firms:
 
  1. CP37/15 sets out additional proposed ring-fencing policy, including in the areas of prudential requirements, intragroup arrangements and the use of financial market infrastructures; and
  2. CP38/15 proposes the creation of a new framework requiring firms to ensure the continuity of critical shared services.

Background

In response to the financial crisis, a number of domestic and international reforms to bank regulation have been introduced or are currently being implemented. Many of these reforms seek to improve the resilience and resolvability of banks, including through making changes to their structure. In the United Kingdom, the PRA is required, under the Financial Services and Markets Act 2000, as amended by the Financial Services (Banking Reform) Act 2013 (‘the Act’), to make rules to implement the ring-fencing of core UK financial services and facilities. Readers are referred to HM Treasury's '2010 to 2015 government policy: bank regulation' (see External Links) and Chapter 1 of CP19/14 for more information - see 'Policy development' below.

The changes

The changes are intended to ensure that ring-fenced bodies (RFBs) are protected from shocks that originate in the rest of their banking group or the financial system in order to minimise disruption to the continuity of the provision of core services. They are also intended to ensure that RFBs, and groups containing RFBs, can be resolved in an orderly manner with minimal disruption to the provision of core services. The Act defines three ‘core services’: 

  1. facilities for the accepting of deposits or other payments into an account which is provided in the course of carrying on the core activity of accepting deposits;
  2. facilities for withdrawing money or making payments from such an account; and
  3. overdraft facilities in connection with such an account.

Implementation

Ring fencing is being implemented through primary (the Act) and secondary legislation (see External Links), and PRA rules and expectations. The Government has stated its intention for ring-fencing to be implemented from 1 January 2019.

Following publication of final policy outlined in the 'Policy development' section on this page, banks have the information they need to implement ring-fencing. This includes final policies on governance, legal entity structures, operational continuity arrangements, prudential requirements, intra-group arrangements, financial market infrastructures and reporting and residual matters.

Banks required to implement ring-fencing, ie those which have core deposits in excess of the threshold of £25 billion, should continue to discuss their overall implementation of ring-fencing with their supervisors. Banks with growth plans which indicate they are likely to meet this threshold in the future should discuss this position with their supervisors.

Ring-fencing transfer schemes - A number of banks subject to ring-fencing are in the process of restructuring their businesses to comply with the requirements of the ring-fencing legislation. An important restructuring tool that these banks will use is a 'ring-fencing transfer scheme' (RFTS). To use an RFTS, a bank must make an application to court. RFTS court directions hearings begin in 2017 and continue into 2018. Dates confirmed so far are available below:

Ring-fencing transfer schemes - dates for banks' court directions hearings

Structural reform - authorisations

To support the implementation of ring-fencing, firms can access information on the applications that they are required to submit under structural reform, including to appoint a skilled person for ring-fencing transfer schemes and to request permission for indirect participation in payment systems in the ‘Structural reform – authorisations’ section of the PRA’s website. 

Policy development

Date ​Title ​CP open/closed Policy published/planned
​20 July 2017 ​Policy Statement 19/17 ‘Responses to CP2/17 ‘Occasional Consultation Paper’’ n/a​
​28 April 2017

Ensuring operational continuity in resolution: reporting requirements – PS10/17

​ ​n/a
​16 February 2017 Occasional Consultation Paper - CP2/17 ​Closed 16.05.17 ​Feedback, final rules and supervisory statement issued in PS19/17
​1 February 2017 The implementation of ring-fencing: reporting and residual matters – responses to CP25/16 and Chapter 5 of CP36/16 - PS3/17

​ ​Some policy publications effective from 1 January 2019 are available in supporting materials for firms to use in preparation for implementation.

​29 July 2016 ​ Ensuring operational continuity in resolution: reporting requirements - CP28/16 Closed 28.10.16​
The PRA's implementation of the systemic risk buffer - CP27/16

Closed
28.10.​16​​

Feedback and final policy published in​ Statement of Policy ‘The PRA’s approach to the implementation of the systemic risk buffer’.
​7 July 2016 ​ ​ The implementation of ring-fencing: reporting and residual matters - CP25/16​ Closed ​07.10.16​ Feedback and final policy issued in PS3/17​
​The implementation of ring-fencing: prudential requirements, intragroup arrangements and use of financial market infrastructures - PS20/16 Some policy publications effective from 1 January 2019 are available in supporting materials for firms to use in preparation for implementation.
​Ensuring operational continuity in resolution - PS21/16 ​n/a
4 March 2016 The implementation of ring-fencing: the PRA’s approach to ring-fencing transfer schemes – PS10/16 n/a​
​​11 December 2015 CP38/15 - Ensuring operational continuity in resolution UPDATE ​Closed 11.03.16 Feedback, final rules and supervisory statement issued in PS21/16
​15 October 2015 CP38/15 - Ensuring operational continuity in resolution Closed 11.03.16 Feedback, final rules and supervisory statement issued in PS21/16
​15 October 2015 CP37/15 - The implementation of ring-fencing: prudential requirements, intragroup arrangements and use of financial market infrastructures Closed 15.01.16​ Feedback, final rules and supervisory statements issued in PS20/16
​18 September 2015 CP33/15 - The implementation of ring-fencing: the PRA's approach to ring-fencing transfer schemes Closed 30.10.15​ ​tbc
​27 May 2015 PS10/15 - The implementation of ring-fencing: legal structure, governance and continuity of services and facilities n/a​ ​
​6 October 2014 CP19/14 - The implementation of ring-fencing: consultation on legal structure, governance and the continuity of services and facilities ​Closed 06.01.15 Feedback, near-final rules and near-final supervisory statements issued in PS10/15.