The PRA’s statutory powers

The Prudential Regulation Authority (PRA) has a variety of formal powers under the Financial Services and Markets Act 2000 (FSMA).

What are the PRA’s statutory powers?

The Financial Services and Markets Act 2000 grants us powers, which fall broadly into two categories:

  • Supervisory

  • For example, we can vary a PRA-authorised firm’s permissions to undertake certain regulated activities, or require a firm to undertake or stop an action. We can also approve (subject to conditions) an application for an individual to perform a senior (insurance) management function. We take action to address emerging risk, not to criticise the firm or individual involved.
  • Disciplinary

  • If a firm fails to comply with regulations, we can take action such as a fine or public censure. This sends a clear signal to the firm, individual or wider regulated community about the actions we consider unacceptable. 
We expect firms, and those who run them, to cooperate with us to resolve any issues.

What do we consider when deciding whether to use our powers?

Our approach documents explain what we expect of authorised firms and how we use our powers. 

Before taking disciplinary action against a firm or an individual, we usually investigate whether (and if so, which) regulatory requirements have been breached. We have published our approach to enforcement, which includes statements of policy and procedure relating to:

  • statutory notices and decision making
  • financial penalties
  • suspensions and restrictions
  • settlement
  • publicity of regulatory action
  • conduct of interviews pursuant to section 169(7) of the FSMA.

The 'PRA investigation referral criteria' sets out the considerations we take into account when deciding whether or not it is appropriate for us to investigate a matter, and to determine which of our responses and/or investigation tools is appropriate.

A summary of our enforcement activity is provided in a speech ‘The PRA’s approach to enforcement’ by Miles Bake, Head of Enforcement and Litigation published on 31 July 2019. This covers: our approach to enforcement; setting out the rationale for enforcement; examples of enforcement in action; and our enforcement ‘agenda’. It explains how enforcement is aligned with and supports our objectives and strategic goals.

How do we exercise our powers?

If we decide to exercise certain statutory powers, we must give a statutory notice to the relevant firm or individual. The appropriate PRA decision-making committee decides whether to give a statutory notice. Our policy ensures the level of seniority of the decision-maker is appropriate to the importance, complexity and urgency of the decision.

Our ‘Regulatory investigations guide’ provides, at a high level, a ‘roadmap’ of our investigation and enforcement processes. It is intended as a reference for firms and individuals who are the subjects (or potential subjects) of a PRA investigation, and their advisors. It is subject to (and should be read alongside) the law, the ‘PRA investigation referral criteria’, the ‘Prudential Regulation Authority’s approach to enforcement: statutory statements of policy and procedure’, the Bank of England’s 'Enforcement Decision Making Committee - Policy Statement PS/EDMC2018’, and any other relevant PRA publications.

This page was last updated 30 July 2019
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