News release
The Prudential Regulation Authority (PRA) has today published a discussion paper (DP) describing how it proposes to approach policy-making as it takes on wider rulemaking responsibilities following the UK’s departure from the European Union. The Financial Services and Markets Bill (‘FSM Bill’) will implement the reforms identified by the government as part of its Future Regulatory Framework Review, which was established to consider how the UK financial services regulatory framework should adapt to be fit for the future outside of the European Union.
In the DP, the PRA sets out its ambition to be a strong, accountable, responsive and accessible policymaker. This means the PRA will:
- Continue to be driven by the pursuit of strong standards, which underpin UK financial stability and support its status as a world leading financial centre;
- Assume broader rule-making responsibilities. The ability to update rules directly in the PRA Rulebook will allow it to respond quickly to changes in the external environment. The PRA will have more scope to adapt its rules to account for new risks, and to calibrate its approach in a way that better reflects the characteristics of its regulated firms and the UK financial system;
- Be proactive in its approach to the secondary competitiveness and growth objective and look for opportunities to advance it. This means looking more broadly at the ways in which the PRA can facilitate competitiveness and growth and also taking advantage of the additional opportunities the PRA will have to review in areas of policy that have previously been fixed in UK legislation.
The PRA will act within a strong policy and accountability framework set and overseen by Parliament, advancing the objectives Parliament and the government have given it. As the PRA takes on wider responsibilities, it recognises the importance of appropriate accountability, greater transparency, and clearly communicating the reasoning underpinning its judgements. It will continue to engage with HMT, and will enhance its engagement in certain areas in response to reforms introduced in the FSM Bill, such as HMT’s power to require regulators to review their rules.
Sam Woods, CEO of the Prudential Regulation Authority and Deputy Governor for Prudential Regulation, said:
‘’This is an important moment for the PRA. The move to a more British style of regulation, with technical rules made by regulators rather than set out in law, will enable us to deliver strong prudential standards in a manner that is proportionate, supports competitiveness and is tailored to the UK market. We intend to take full advantage of the opportunities this change will create, and look forward to hearing views from our stakeholders on how we can do this most effectively”.
The PRA welcomes comments on the DP from all interested parties. Comments can be submitted until 8 December. Responses will inform a future consultation on the PRA’s approach to policy.