The Bank of England has released today a Quarterly Bulletin article on the Prudential Regulation Authority (PRA) by Andrew Bailey, Executive Director of the Bank of England and Managing Director of the Financial Services Authority’s Prudential Business Unit, Sarah Breeden and Gregory Stevens of the Bank’s PRA Transition Unit.
Alongside the article, the Bank has also released a short video interview with Andrew Bailey: “A new approach to financial supervision: the Prudential Regulation Authority”.
In April 2013 the PRA, as part of the Bank of England, will become the UK’s prudential regulator for banks, building societies, credit unions, insurers and major investment firms. This is part of a wider reform of the UK regulatory framework, which also sees the creation of a Financial Policy Committee within the Bank, and a new conduct regulator, the Financial Conduct Authority. The article provides a summary of the PRA’s objectives and its approach, setting out, at a high level, what the PRA will expect of firms in relation to these objectives and what the PRA will do in the course of supervision. It is aimed at providing a clear indication of how the PRA will operate to firms, other interested parties, and the wider public. It provides a summary of two more detailed documents about the PRA’s approach that were published jointly by the Bank and the FSA in October 2012, covering banking and insurance respectively.
Andrew Bailey said:
“The PRA’s job will be to ensure the PRA protects the public’s access to critical financial services and that we contribute towards achieving and sustaining a healthy economy. Our goal will be to focus on the things that matter most to achieving our objectives and our responsibility to the public, given to us by Parliament.”
“This article provides a summary of how we intend to implement the approach in practice. It will be based on setting clear and concise standards for all PRA regulated firms. The PRA’s approach will be very clearly judgement-based rather than focussing on narrow rules, and it will be forward-looking, taking into account a range of possible risks to our objectives and the stability of firms.”
“This will not be a zero failure regime, but one where firms can fail in an orderly way without major detriment to the wider system. We will be here to ensure the safety and soundness of firms and the stability of the financial system. We want, and need, to ensure that the public can put their trust in a safe and sound financial system for the future.”
Notes to Editors