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Home > Prudential Regulation Authority > New Bank Start-up Unit > New Bank Start-up Unit - After authorisation
 

New Bank Start-up Unit - After authorisation



Being an authorised bank in the United Kingdom brings with it a number of obligations. You must meet the standards set out in both the FCA Handbook and the PRA Rulebook and must provide us with relevant information to show you are meeting these standards. You will also be subject to ongoing supervision by both regulators.

This section provides more detail on:
 

 What are the Threshold Conditions, Fundamental Rules and Principles for Businesses?

As an authorised firm you will need to ensure that you meet the PRA’s and the FCA’s Threshold Conditions at all times – please see Threshold Conditions for more detail.

In addition to the Threshold Conditions, there are:

  • Eight PRA Fundamental Rules, which are high-level rules which collectively act as an expression of the PRA’s general objective of promoting the safety and soundness of regulated firms; and
  • Eleven FCA Principles for Businesses which are a general statement of firms’ fundamental obligations under the regulatory systems.

Please see the Fundamental Rules and Principles for Businesses for more detail.

The PRA Rulebook and the FCA Handbook also set out more detailed requirements on authorised firms. There are also a number of EU regulations which directly impose requirements on banks in areas such as capital requirements.

It is vital that boards and senior management understand the PRA’s and the FCA’s Threshold Conditions, the Fundamental Rules, the Principles for Businesses, the more detailed rules in the PRA Rulebook, the FCA Handbook and the directly applicable EU regulations and that they establish within their firms a culture that supports adherence to the spirit and the letter of the requirements.

 What is our supervisory approach for new banks?

As a bank you will be supervised by the PRA for prudential matters and the FCA for conduct matters. The table below summarises each regulator’s approach to supervision.
​PRA FCA​
​The PRA’s supervisory approach relies significantly on judgement. The PRA supervises firms to judge whether they are safe and sound, and whether they meet, and are likely to continue to meet, the PRA’s Threshold Conditions.

Its approach is forward looking and assesses firms not just against current risks, but also against those that could plausibly arise in the future. The PRA focuses on those issues and those firms that pose the greatest risk to the stability of the UK financial system.

You can read more about the PRA’s approach to banking supervision here.
​The FCA’s supervisory approach is designed around its three operational objectives of protecting the consumer, promoting competition and enhancing the integrity of markets.

Firms are categorised as either ‘fixed portfolio’ or ‘flexible portfolio’ with most newly authorised banks moving into the flexible portfolio.

You can read more about the FCA’s approach to supervision here, and in particular the FCA’s approach to supervision of flexible portfolio firms here.
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 What can you expect in the early days of being supervised, and in subsequent years?

In practical terms, the approach to supervision also recognises that newly authorised banks often require more support in their early years.
 
 PRA​​​​ ​and FCA

​ As a newly authorised bank you can expect the following:

  • access to the New Bank Start-up Unit helpline;
  • access to your supervisors at both the PRA and the FCA;
  • regular capital and liquidity reviews, if appropriate;
  • monthly regulatory update emails (requires free subscription);
  • invitations to seminars targeted at new and prospective banks;
  • invitations to seminars specifically targeted at banks’ senior management and non-executive directors (NEDs); and
  • invitations to events, alongside other firms, on key topics.
​PRA FCA

​As a new bank there is a standard supervisory timetable which includes:

  • monthly – you will have a catch-up call with your supervisor. You will be asked to provide materials, such as board papers, management information, committee minutes, audit report, etc before the call;
  • after six months – we will conduct an internal Mid-Point Review. You should not expect to receive any specific communication regarding this meeting unless we have concerns; and
  • around twelve months – we will conduct an internal review of your firm at a Periodic Summary Meeting (PSM) - see below.

​As a new bank within our flexible portfolio:

  • you will have an introductory meeting with your supervisors once you are fully operational. At this meeting we will also discuss the types of events which should warrant further contact with supervision going forward;
  • you will have subsequent meeting(s) with supervision. The frequency of these meetings will predominately be determined by your business model;
  • your day-to-day contact with the FCA will be via the New Bank Start-up Unit helpline;
  • you will be subject to event driven, reactive supervision (Pillar II) and issues and products supervision (Pillar III);
  • overall though you should expect your day-to-day contact with the FCA to be less than with the PRA.
 
 
PRA Periodic Summary Meeting​ Periodic Summary Meeting​

​The Periodic Summary Meeting (PSM) is an annual internal meeting held by the PRA to review your firm. It is a cornerstone of the PRA’s supervisory process and represents a chance for your supervisor to discuss your firm with senior PRA management.

It normally takes place shortly after your Capital Supervisory Review and Evaluation Process (C-SREP) and your Liquidity Supervisory Review and Evaluation Process (L-SREP) and will set the supervisory agenda and outline your capital requirements for the coming year.

There are three parts to a PSM:

  1. fact finding on-site visits or desk-based reviews, which may focus on any or all of the following: capital, liquidity, governance, risk management and business model;
  2. an internal PRA review; and
  3. a formal letter outlining our thoughts and your obligations.

If appropriate, we will also contact your Home State Supervisor as part of the PSM.

 

PRA Capital and liquidity reviews​​

​The Capital Supervisory Review and Evaluation Process (C-SREP) and Liquidity Supervisory Review and Evaluation Process (L-SREP) can take the form of either visits from the PRA or a desk-based review. If we do visit your firm, the C-SREP and L-SREP visits will usually be carried out separately.

The PRA may want to meet with a number of senior managers and NEDs to discuss the firm’s capital and risk management polices as set out in the ICAAP, ILAA and supporting documents. The PRA will ask for these documents about a month in advance of the meeting.

The PRA has committed to reviewing the capital requirements for new firms on an annual basis, typically for the first five years of operation. For liquidity requirements, we may review after one year before moving to biennial reviews.

More information on the C-SREP can be found in PRA Supervisory Statement 31/15 ‘The Internal Capital Adequacy Assessment Process (ICAAP) and the Supervisory Review and Evaluation Process (SREP)’.

More information on the L-SREP can be found in PRA Supervisory Statement 24/15 ‘The PRA’s approach to supervising liquidity and funding risks’.

 
 
FCA Introductory meeting and subsequent meetings​
​The introductory meeting is an opportunity for FCA Supervision to get to know your firm better, explain our expectations around your conduct framework and open channels of communication.

The FCA will require an outline of your business plan and strategy. In the meeting, we will jointly design a customised interaction plan based on the specific characteristics of your firm and our risk appetite.

As part of this interaction plan, there will be subsequent meeting(s) where you will update us on progress to date and discuss challenges so far.

The frequency of these meetings will predominately be based on your business type and risks to our objectives.
 
 
When should you contact the FCA?​

​At our introductory supervisory meeting we will discuss the types of events where you should contact us. The list below is not exhaustive but does include some examples of events (where they are material) where you should contact FCA Supervision.

Retail Banking

  • changes to business model and/or strategy;
  • failings of IT infrastructure which impact the customer;
  • financial crime and anti-money laundering issues;
  • notification of consumer redress and remediation exercises;
  • governance and senior management changes; and
  • data breaches.

Wholesale Banking

  • changes to business model and/or strategy;
  • failings of IT infrastructure which impact the customer;
  • governance and senior management changes;
  • conflict of interest management breaches; and
  • material financial crime and anti-money laundering issues.
 

As your firm becomes established both regulators will move you to their usual supervisory processes for banks. The timing of this will be different for each firm and potentially different for each regulator and we will discuss this with you at the appropriate stage.

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 Where can you find out more about regulatory fees and levies?

As an authorised firm you will need to pay an annual fee. The amount you will be charged will depend on the type of regulated activities your firm carries out, the extent of your firm’s activities and how much it costs us to regulate these types of activities. You can find more about regulatory fees and levies here.
 

 What do you need to know to complete regulatory reporting?

As an authorised firm, you will be required to submit reports. The reports you will need to submit will be based on the regulated activities you undertake and the nature of your firm (ie if you are a UK headquartered bank, a subsidiary or a branch of an international bank). This will include providing the PRA with the information it needs to monitor your financial position and performance and the FCA with more conduct-focused information on sales, complaints etc.

If your firm has a return due for submission but has not conducted any regulated activities from the date of authorisation to the reporting end date, you will still be required to submit the return.

You are also obliged to submit your regulatory returns in a timely, accurate and efficient manner. If you fail to submit your regulatory return(s) by the due date(s), you will incur an administrative fee of £250.

You will submit many of these returns via our GABRIEL system (see below) where you can also view your reporting schedule. There may be other returns that are collected outside of GABRIEL but where applicable your supervisor will provide you with templates and any instructions.

 What are the key regulatory systems?

GABRIEL – As an authorised firm, you will be obliged to submit regulatory returns. These returns must be submitted through our GABRIEL system, which is an online regulatory reporting system for the collection, validation and storage of regulatory data. You can register for GABRIEL here. More information is provided in the Welcome Pack that you receive when you are authorised.

Once you have done this, you will be able to view your firm's reporting schedule which details the returns that you are required to submit over the next 12 months, and when they are required.

You can find more information and help with GABRIEL here.

Connect – You will need to use Connect to submit applications for some regulatory transactions and, to keep your Standing Data up to date. Standing Data is basic information about your firm, which is required in order for the PRA and FCA to undertake their supervisory duties. This includes: registered name of the firm; trading name(s) of the firm; country of incorporation; registered office; principal place of business; website address; telephone number; the name and email address of the principal compliance contact; name and address of the firm’s auditor; and accounting reference date. You can register for Connect here.

You can find more information and help with the Connect system here.

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 How can you keep up to date with regulatory information?

There are several ways for you to keep up to date with changes to the regulatory landscape.

The PRA homepage on the Bank’s website includes the latest news and publications, and links to key initiatives. It also includes all PRA publications, including policy publications which banks can search by sector and type of publication. Likewise, the FCA website includes all FCA Consultation Papers and Policy Statements.

You should also:

 Didn't find the information you were looking for on this page? Email us.

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