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 they are meeting the expectations set out in them.