Low impact amendments to PRA rules and policy material

Low Impact Amendments Consultation - October 2025 (LIAC02/25)

The PRA proposes the conditional disapplication of PRA rules to give effect to the deference arrangements under the UK-Swiss Berne Financial Services Agreement (BFSA). This is to ensure that the PRA Rulebook reflects the UK’s international commitments under the BFSA, which is due to come into force in early 2026. 

In particular, Annex 5 Section VIIII.A.1.b of the BFSA provides that Swiss Covered Financial Services Suppliers are relieved from any obligation to comply with the authorisation and certain prudential measures of the UK that apply solely to financial services suppliers.

In their current formulation, some PRA rules would apply to some Swiss firms providing services to UK customers under the BFSA (covered Swiss firms), which would not be consistent with the BFSA when it comes into force. The PRA is proposing a rule in the General Provisions Part of the PRA Rulebook that would disapply any PRA rule to the extent it is contrary to the BFSA.

The PRA considers that the proposed rule will have limited impact. PRA rules do not apply to covered Swiss firms that are not PRA authorised, but covered Swiss firms that also have a UK branch may be authorised by the PRA. If they are PRA-authorised, most PRA rules apply to such firms in respect of the activities carried out from its UK establishment(s), so will not affect the covered Swiss firms’ BFSA activities – since these must be carried out from Switzerland. 

Those PRA rules which apply to overseas firms on a whole entity basis could apply to BFSA activity. Under these proposals, such rules, in particular, the Fundamental Rules and the notifications and information gathering parts of the PRA Rulebook would be disapplied to the extent they are contrary to the BFSA. Covered Swiss firms are still expected to comply with such rules in respect of their non-BFSA activities, including where decisions or activities have an impact on both BFSA and non-BFSA activities. 

If implemented, this proposal would provide legal certainty for relevant BFSA firms and ensure PRA rules are compatible with BFSA.

Rule 5.1 of the Transitional Measure on Technical Provisions (TMTP) part of the PRA Rulebook states that a firm must calculate its TMTP to satisfy .

The PRA proposes to make a minor amendment to the formula defining Wr (an amount calculated to increase the rate of run-off of TMTP) in Rule 5.2 of the TMTP Part of the PRA Rulebook. This change is being made to better align the runoff of the TMTP to the original policy intent and improve consistency between firms reporting on annual and quarterly bases.

The PRA proposes that firms should apply the new formula for ‘W_r’ from 31 December 2025 onwards, using existing W values as calculated with the previous formula for ‘Wq’ where applicable, rather than recalculating prior figures retrospectively or restating previously reported results.

This straightforward approach would avoid any disproportionate need to establish more complex transitional rules, allowing the change to be implemented ahead of year-end 2025 calculations. It is not expected to lead to materially different results compared to an alternative of recalculating prior W values.

The PRA proposes to amend the ‘no co-mingling’ requirement in Rule 2.2A(3) of the Solvency Requirements in the Insurance Special Purpose Vehicle (ISPV) Part of the PRA Rulebook, to introduce a limited exception (rule 2.2B) permitting single investors to support multiple risk transformation transactions that are part of a single contractual arrangement.

This exception would reflect a common market practice in the collateralised reinsurance segment of the insurance linked securities (ILS) market. The proposal would not create any material additional risks as the UK ISPV would still be subject to all existing PRA requirements applicable to each risk transformation transaction, including being fully funded at all times, ensuring effective risk transfer, and that the claims of the investor are at all times subordinated to the claims of the cedant. Current UK ISPV reporting requirements still apply.

If there ceases to be a sole investor, the exception in Rule 2.2B would no longer apply and the UK ISPV would need to ensure compliance with Rule 2.2A(3).

The PRA proposes to amend Supervisory Statement (SS) 2/25: Prudential considerations for insurance and reinsurance undertakings when transferring risk to Special Purpose Vehicles to reflect this exception, including how a UK ISPV might comply with other ongoing requirements whilst benefitting from it.

Subject to consultation, the PRA considers that these clarifications pose no significant risk to the PRA’s primary objective. Moreover, aligning with common market practice in collateralised reinsurance and enabling more efficient long-term investor relations may further the PRA’s secondary competitiveness and growth objective.

The PRA is proposing a collection of miscellaneous low impact amendments to the following parts of the PRA Rulebook to ensure its accuracy:

• The Glossary Part. The PRA proposes amending the definition of ‘Swiss Treaty Agreement’ in the PRA Rulebook Glossary by updating it to reference the current agreement between the UK and Swiss Confederation on direct general insurance.
• The Fundamental Rules Part. The PRA proposes deleting the definition of a ’branch’ in Rule 1.2 of the Application and Definitions Chapter. This term was previously used in Fundamental Rule 3.1(2) but the reference was removed by the Liquidity Standards Consequentials Instrument 2015. The remainder of Rule 3.1 has since been revoked, rendering the definition of a ‘branch’ in Rule 1.2 redundant. 
• General Provisions Part. The PRA proposes deleting definitions referring to Temporary Permissions Regime (TPR) firms from Rule 1.2 of the Application and Definitions Chapter and from Rule 3.2 of the Disclosure to Retail Clients Chapter. The TPR was a transitional arrangement following the UK’s withdrawal from the EU, running from January 2021 to December 2023. All firms were removed from the regime over that three-year period. This means that the concept of a TPR firm is no longer applicable, and the related definitions are redundant.
• Interpretation Part. Rule 1.1 of the Interpretation Part currently lists who the Part applies to. The PRA considers this list unnecessary and potentially confusing, as the Interpretation Part is intended to apply to all rules within the PRA Rulebook. The PRA therefore proposes deleting the list and clarifying that the part applies to every person that any rule in the PRA Rulebook applies to.
• Notifications Part. Rule 1.1A(2) of the Notifications Part (application to CRR consolidation entities) refers to Rule 2.3(4) but that rule does not exist in the Part. It should have referred to 2.3(A), which applies to CRR consolidation entities. The PRA therefore proposes to correct this typographical error in the rule.
• Policyholder Protection Part. The PRA also proposes deleting references to the TPR in the Policyholder Protection Part.

• Draft PRA Rulebook: Miscellaneous Amendment Instrument [2025] (pdf)

The PRA has a statutory duty to consult at a formative stage when making rules (Financial Services Markets Act 2000 (FSMA) s138J), or standards instruments (FSMA s138S). When not making rules, the PRA has a public law duty to consult widely where it would be fair to do so.

This webpage includes details of amendments to rules and policy material, with details explaining the purpose of the amendments and reasons for proposing them.

The PRA considers that the amendments proposed here are compatible with its duties to advance so far as is reasonably possible its primary objective (stability and policyholder protection) and, subject to that, its secondary objectives (competition and competitiveness and growth). The PRA considers that the proposed amendments do so by improving the quality and clarity of its rules and policy material, while using the PRA’s resources in the most efficient and economic way, in line with the FSMA regulatory principles and Legislative and Regulatory Reform Act 2006 principles.

In carrying out its policymaking functions, the PRA must also have regard to regulatory principles specified in FSMA and other legal obligations.  Where the PRA considered that any ‘have regards’ were of particular significance to proposals, this is set out above. 
The PRA considers that the impact of the proposed rule changes on mutuals is not expected to be significantly different from the impact on other firms, unless specified below.

In developing its proposals, the PRA has had due regard to the equality objectives under s.149 of the Equality Act 2010. Unless specified below, the PRA considers that the proposals do not give rise to equality and diversity implications.

A cost benefit analysis is not required under FSMA for matters which give rise to no cost increase or only one of minimal significance (Section 138L(3)) – this exemption applies in this case, unless specified.

The FCA has been consulted on these proposals and, unless specified, the PRA’s statutory panels have not been engaged.

This page also contains details of amendments to rules and policy materials following consultation. The above considerations also apply where relevant to this stage unless further specified below. The details below also include, in general terms, a summary of any representations received following consultation and the PRA’s feedback.

LIAF02/25: October 2025 – finalising LIAC01/25 and minor updates and corrections made without further consultation

Amendment to the External Audit Part of the PRA Rulebook, Application and Definitions, Rule 1.3

The PRA is amending Rule 1.3 of the External Audit part of the PRA Rulebook to correct a column reference following publication of final policy in PS15/24 – Review of Solvency II: Restatement of assimilated law. The column currently referred to (C0090 in IR.12.01.01) no longer exists and should have been replaced by C0040.

The PRA considers that it can make this amendment without further consultation, as it is within the scope of a previous consultation, CP12/23 – Review of Solvency II: Adapting to the UK insurance market, made near-final in PS3/24 – Review of Solvency II: Reporting and disclosure phase 2 near – final. No new developments have occurred since that would, in the PRA’s view, require further consultation.

This rule amendment will come into effect on 21 October 2025.

• PRA Rulebook: Solvency II Firms: Non-authorised Persons: External Audit Amendment Instrument 2025 (PDF)

Amendment to references in the Securitisation Part of the PRA Rulebook, Securitisation General Principles, Rule 2, Article 7

The PRA is amending the Securitisation Part, Rule 2, Article 7 to remove references to section 85 of FSMA and rules made by the FCA for the purposes of Part 6 of FSMA (relating to prospectus for securitisation issuance).

The PRA is replacing the reference to section 85 with a reference to the rules in the Prospectus Rules: Admission to Trading on a Regulated Market (PRM) of the FCA Handbook. The PRA has also made a transitional provision to account for securitisations for which the securities were issued (or the initial securitisation positions of which were created) prior to 19 January 2026.

This amendment is necessary because the relevant parts of section 85 and Part 6 of FSMA will be revoked by the Public Offers and Admissions to Trading Regulations 2024 with effect from 19 January 2026.

The PRA considers that it can make this amendment without further consultation because it is within the scope of a previous consultation, CP15/23 – Securitisation: General requirements. It is not a policy change but a consequential change reflecting changes to  relevant legislation. A corresponding change has already been implemented by the FCA. Since CP15/23 there have not been any new developments giving rise to new considerations and there are no other overriding reasons to consult. This amendment ensures coherence between relevant FCA and PRA rules.

This rule amendment will come into effect on 19 January 2026.

• PRA Rulebook: Securitisation Instrument 2025 (PDF)
  

October 2025 – final policy following July 2025 Low Impact Amendments Consultation 

In LIAC01/25 the PRA consulted on:

1. An amendment to the definition of ‘parent undertaking’ in the Solvency II Firms Sector of the PRA Rulebook.
2. An amendment to the Internal Capital Adequacy Assessment (ICAA) Part of the PRA Rulebook.
3. The deletion of the Benchmarking of Internal Approaches Part of the PRA Rulebook.

The PRA received no responses to the consultation. The PRA will finalise proposals 1 and 2 without any significant changes to the draft rules consulted on. The PRA also plans to proceed with proposal 3 as consulted on but intends to reflect this change in the Basel 3.1 standards final rules, when these are published.

The ‘statutory duty to consult’ analysis included above remains applicable.

Proposal 1 will take effect on 1 January 2026.

Proposal 2 will take effect on 1 July 2026.

• PRA Rulebook: Glossary Amendment Instrument 2025 (PDF)

• PRA Rulebook: CRR Firms: Internal Capital Adequacy Assessment Instrument 2025 (PDF)