The way we prudentially supervise firms is based on policies that ensure judgements about risks to our objectives are made within a clear and coherent framework.
How we make prudential policy
We aim to establish and maintain published policy material that is consistent with our objectives, clear in intent, straightforward in presentation and as concise as possible. Taken as a whole, the set of published policy material is intended to set out clearly and concisely what outcomes we expect, so that firms can meet these expectations through their actions.
The policy framework for our supervision is to a large extent agreed internationally, both at a global level and within the EU. Relevant EU Regulations, including binding technical standards that apply directly to UK firms, will not be reproduced in the PRA Rulebook but will be part of our requirements of firms. Firms are also subject to guidance by the European supervisory authorities.
Where we issue rules in areas not covered by EU law, we aim to do so in a manner that is clear about the intended outcome, straightforward to understand and as concise as possible. We set out these rules in the PRA Rulebook, which contains direct requirements for firms. Our policy framework also includes non-rule material, which is contained in supervisory statements.
We expect firms to engage directly with policy materials, including rules in the PRA Rulebook, supervisory statements and EU materials, and determine - bearing in mind the overarching principle of safety and soundness - whether the are meeting the expectations set out in them.
More information about how we make policy is available in our approach documents:
Types of PRA policy publication
There are several different types of PRA policy publication:
Discussion paper (DP)
Discussion papers are used to stimulate debate on issues about which we are considering making rules or setting out expectations. We use the responses we receive to DPs to help formulate our policy. Once we establish a preferred position, we will draft rules and supervisory statements and the formal consultation process, by way of a consultation paper, will commence.
Consultation paper (CP)
Consultation papers are the formal document by which we set out draft proposals and invite comments on them from the public. CPs normally deal with one discrete issue of significance. If there are a number of small and/or uncontroversial topics, they are normally dealt with in Occasional CPs instead.
Policy statement (PS)
Policy statements set out our feedback on consultation responses, together with our policy line. We only issue feedback when there have been extensive comments by the public and industry.
Supervisory statement (SS)
Supervisory statements set flexible frameworks for firms, incorporating new and existing expectations. They focus on our expectations and are aimed at facilitating firm and supervisory judgement in determining whether they meet those expectations. They do not set absolute requirements – these are contained in rules.
Statement of policy (SoP)
Statements of policy are the formal document in which we detail our policy on a particular matter. Statements of policy usually set out our approach to exercising powers conferred by the Financial Services and Markets Act 2000. They do not contain our expectations, which are set out in supervisory statements.
Engaging with global and European policy
Banking and insurance are international industries and, to a large extent, the policy framework for supervising banks and insurance companies is agreed internationally. Therefore effective international cooperation is essential to the PRA’s success.
At the global level, we are actively involved in the work of the Financial Stability Board, the Basel Committee on Banking Supervision, the International Association of Insurance supervisors, and the Joint Forum. We use these forums to advance our safety and soundness and policyholder protection objectives.
The UK is an international financial centre, so one of our key responsibilities is supervising overseas firms operating in the UK, as well as UK groups operating abroad. We engage actively with our overseas counterparts in supervising cross-border firms. To support this, we maintain co-operation agreements, including memoranda of understanding with overseas counterparts to enable confidential information sharing on cross-border firms. We participate in ‘supervisory colleges’ for firms with significant operations in the UK, and organise and chair the colleges for UK firms.
European engagement and legislation
The policy standards agreed internationally are implemented in Europe through Directives or directly-applicable Regulations. Therefore, we engage actively with relevant European institutions and EU regulators and we are involved in the ongoing development and implementation of the single market in financial services. This involves a comprehensive legislative programme, which must be implemented in the UK.
- The European Banking Authority (EBA)
- The European Securities and Markets Authority (ESMA)
- The European Insurance and Occupational Pensions Authority (EIOPA).
The European Systemic Risk Board (ESRB) is an independent EU body responsible for macroprudential oversight of the EU financial system.
We are involved in the European System of Financial Supervision and we are the UK representative on the EBA and EIOPA. The Financial Conduct Authority (FCA) represents the UK at ESMA and the Bank of England is the voting member on the ESRB.
Part of the role of the European Supervisory Authorities is to improve coordination between national supervisory authorities in the EU. They have significant powers to propose draft rules and to take decisions binding on national supervisors, and to a lesser extent, firms. We are involved in ESA working groups that develop rules and guidance.
Overseas regulators that have not previously contacted us should get in touch for assistance or to notify us ahead of contacting PRA-authorised firms.
The PRA Rulebook sets out the rules we make that apply to the firms we authorise.
If you would like to request authorisation to reuse PRA Rulebook content, contact: Firm Enquiries Team (MG1-SE), Prudential Regulation Authority, 20 Moorgate, London, EC2R 6DA. You can also phone +44 (0)20 3461 7000 or email email@example.com.
Section 138G of the Financial Services and Markets Act 2000 (FSMA) requires us to exercise our rule-making powers in writing, in a document FSMA calls a ‘rule-making instrument’, and to make all such instruments available. We publish these instruments online. This fulfils our obligation to publish our rules. The definitive version of the rules at any particular time is the version contained in the legal instruments. The instruments are consolidated into the rulebook online.
If you experience any issues accessing the rule-making instruments in the PRA Rulebook, these are available below by year.