On 1 March, the PRA Board will be replaced by the Prudential Regulation Committee (PRC), and the PRA will be brought within the single legal entity of the Bank of England. These changes are required by the Bank of England and Financial Services Act 2016 (the Act).
From the above date the PRA’s most important supervisory and policy decisions will be made by the PRC. There are no changes to the PRA’s objectives or functions.
The Act provides for one member to be appointed by the Governor with the approval of the Chancellor. The Governor has appointed Ben Broadbent. HM Treasury has announced today that the current external members of the PRA Board have been re-appointed by the Chancellor.
The membership of the PRC will therefore be as follows:
|Chair - Mark Carney
||Deputy Governor, Prudential Regulation and Chief Executive of the PRA|
|Sir Jon Cunliffe
||Deputy Governor, Financial Stability|
||Deputy Governor, Markets & Banking|
||Deputy Governor, Monetary Policy|
||Chief Executive of the Financial Conduct Authority|
The Governor said:
“The creation of the Prudential Regulation Committee tomorrow will deliver a simpler and more coherent governance structure within the Bank, while ensuring that the Prudential Regulation Authority remains strongly focused on its statutory objectives. Ben’s appointment brings macroeconomic and microprudential perspectives even closer together within One Bank to promote the safety and soundness of PRA-supervised banks and insurers”.
As previously announced, the creation of the Prudential Regulation Committee (PRC) and the legal integration of the Prudential Regulation Authority (PRA) into the Bank were required by the Bank of England and Financial Services Act 2016 (the Act). The commencement regulations – which include the effective date – are made by HM Treasury, in exercise of the powers conferred under the Act.
- The PRC replaces the PRA Board as the governing body of the PRA as part of the Bank of England.
- The PRC is now on the same legal footing as the Monetary Policy Committee and the Financial Policy Committee.
- The PRA’s legal status as a subsidiary company has been ended.
These changes will maintain the PRA’s operational independence, at the same time as promoting the sharing of knowledge, expertise, and analysis throughout One Bank.
According to the Act, the PRC is to consist of:
- the Governor of the Bank,
- the Deputy Governor for prudential regulation,
- the Deputy Governor for financial stability,
- the Deputy Governor for markets and banking,
- one member appointed by the Governor of the Bank with the approval of the Chancellor of the Exchequer,
- the Chief Executive of the Financial Conduct Authority, and
- at least 6 members appointed by the Chancellor of the Exchequer.
The dates of all terms of appointment are available here.
The statutory objectives of the PRA, which underpin its forward-looking, judgement-based approach to supervision, remain unchanged:
- a general objective to promote the safety and soundness of the firms it regulates;
- an objective specific to insurance firms, to contribute to the securing of an appropriate degree of protection for those who are or may become insurance policyholders; and
- a secondary objective to facilitate effective competition.