Strengthening accountability in banking and insurance: amendments and optimisations

Policy Statement 12/17 | Consultation Paper 34/16

Published on 12 May 2017

Strengthening individual accountability in banking and insurance: amendments and optimisations – PS12/17

This Prudential Regulation Authority (PRA) Policy Statement (PS) provides feedback to responses to Consultation Paper (CP) 34/16 ‘Strengthening individual accountability in banking and insurance: amendments and optimisations’.  It also provides:

  • the final rules amending the Senior Managers and Certification Regime (SM&CR) (Appendix 1) and Senior Insurance Managers Regime (SIMR) (Appendix 2); 
  • updates to Supervisory Statement  (SS) 28/15 ‘Strengthening individual accountability in banking’ (Appendix 3) and SS35/15 ‘Strengthening individual accountability in insurance’ (Appendix 4); and
  • the PRA Statement of Policy (SoP) ‘Conditions, time limits and variations of approval’ (Appendix 5); and
  • final versions of forms with some slight modifications, to be used for applications from Tuesday12 September 2017 (Appendix 6).

This PS is relevant to all PRA-regulated firms. However, at the time of publication, certain chapters or sections thereof may only be relevant to either:

  • banks, building societies, credit unions and PRA-designated investment firms (collectively referred to as Relevant Authorised Persons (‘RAPs’); and/or
  • Solvency II firms, the Society of Lloyd’s, managing agents; third country branch undertakings and Insurance Special Purpose Vehicles (ISPVs), large non-directive firms (NDFs) and/or small NDFs (collectively referred to as ‘insurers’).

The PRA received sixteen responses to CP34/16:

  • Chapter 2 of this PS summarises feedback on the proposals for implementing the amendments to the SM&CR and SIMR in the Bank of England and Financial Services Act 2016 (BoE Act)  and the PRA’s final policy.
  • Chapter 3 of this PS summarises feedback on the proposed optimisations to the SM&CR and the PRA’s final policy.
  • Chapter 4 of this PS summarises feedback on the PRA’s proposed optimisations to SIMR and the PRA’s final policy.
  • Chapter 5 sets out the various timelines for implementing the rules and expectations in this PS.

On 12 May 2017 the PRA issued several other publications on strengthening accountability

Appendices

  1. PRA RULEBOOK: CRR FIRMS: NON-CRR FIRMS: SENIOR MANAGERS REGIME AMENDMENT INSTRUMENT 2017
  2. PDFDownload PDF 
  3. PRA RULEBOOK: SOLVENCY II FIRMS AND NON-SOLVENCY II FIRMS: SENIOR INSURANCE MANAGERS REGIME AMENDMENT (NO 2) INSTRUMENT
  4. PDFDownload PDF 
  5. Supervisory Statement 28/15 UPDATE
  6. Supervisory Statement 35/15 UPDATE
  7. Statement of Policy UPDATE
  8. Updated forms effective from 12 September 2017 are available on the Senior Managers and Senior Insurance Managers Regimes: approvals page. 

Published on 28 September 2016

Strengthening accountability in banking and insurance: amendments and optimisations – CP34/16

Background

In this consultation paper (CP), the Prudential Regulation Authority (PRA) sets out three sets of proposed amendments and optimisations to the Senior Managers and Certification Regime (SM&CR) and Senior Insurance Managers Regime (SIMR).

This CP is relevant to all PRA-regulated firms, although specific chapters or sections may be relevant to either Relevant Authorised Persons or insurers only.

This CP should be read in conjunction with Financial Conduct Authority (FCA) CPs 16/26 and 16/27 which contain the FCA’s equivalent proposals for implementing the changes to the SM&CR introduced by the Bank of England and Financial Services Act 2016 (the Act).

Summary of proposals

Chapter 2 of this CP sets out the PRA’s proposals for implementing the amendments to the SM&CR and SIMR in the Act and includes:

  • setting out the PRA’s expectations on the duty of responsibility;
  • applying certain Conduct Rules/Conduct Standards to those non-executive directors (NEDs) who are not approved persons under the SMR and SIMR; and
  • a minor, technical change to the PRA’s Statement of Policy (SoP) on Conditions, time limits and variations of approval.

Chapter 3 of this CP sets out the PRA’s proposed optimisations for the SM&CR, which include:

  • creating a new PRA Senior Management Function (SMF), the Chief Operations function (SMF23), which will bring the individual with overall responsibility for managing, and ensuring the operational continuity and resilience of, the internal operations, systems and technology of a firm; 
  • creating a new PRA Prescribed Responsibility for managing, and ensuring the operational continuity and resilience of, the internal operations, systems and technology of a firm;
  • inserting additional criteria to the definition of the Head of Key Business Area function (SMF6) to supplement the existing quantitative thresholds in rule 3.6 of the Senior management Functions Part of the PRA Rulebook; and
  • clarifying the PRA’s expectations of Statements of Responsibilities (SoRs) and Management Responsibilities Maps (MRMs).

Chapter 4 of this CP sets out the PRA’s proposed optimisations for the SIMR, which include:

  • a streamlined regime for firms in run-off; and 
  • tailored required for small, less complex insurers that elect to outsource their internal audit function (mirroring with certain differences the requirements for RAPs in rule 4.2(3) of the Allocation of Responsibilities Part of the PRA Rulebook.

Responses

This consultation closed on Monday 9 January 2017.

The CP including appendices runs to 199 pages. To be helpful to readers the PRA has attached a complete, and split, version.

PDFConsultation Paper 34/16 - complete version

PDFConsultation Paper 34/16 - split version

Appendices
  1. Draft instrument PRA RULEBOOK: CRR FIRMS, NON CRR FIRMS: SENIOR MANAGERS REGIME AMENDMENT (NO.X) INSTRUMENT [DATE]
  2. PDFDownload PDF 
  3. Draft instrument PRA RULEBOOK: SOLVENCY II FIRMS, NON SOLVENCY II FIRMS: SENIOR INSURANCE MANAGERS REGIME AMENDMENT (NO.2) INSTRUMENT [DATE]
  4. PDFDownload PDF 
  5. Draft revised Supervisory Statement 28/15 – Strengthening individual accountability in banking
  6. PDFDownload PDF 
  7. Draft revised Supervisory Statement 35/15 – Strengthening individual accountability in insurance
  8. PDFDownload PDF 
  9. Draft forms
  10. PDFDownload PDF 
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