Supervising building societies' treasury and lending activities

Policy Statement 34/16 | Consultation Paper 12/16

Published on 1 December 2016

Supervising building societies’ treasury and lending activities – PS34/16

Overview

This Prudential Regulation Authority (PRA) policy statement (PS) provides feedback on responses to Consultation Paper (CP)12/16, ‘Supervising building societies’ treasury and lending activities’ and the final Supervisory Statement (SS)20/15 (see Appendix).

The PS is relevant to building societies, and should be read in conjunction with the PRA Rulebook for CRR firms and the PRA’s approach to banking supervision.

The guidance in SS20/15 takes effect from 1 January 2017.  

Feedback on consultation responses

The PRA received 22 responses to the proposals in the CP, including from 17 individual building societies. The PS sets out the main issues raised by respondents, following the same structure as the SS. The PRA has also made several clarifications and corrections to the SS text to address points raised by respondents and following its own review.

PDFPolicy Statement 34/16

Appendix

Supervisory Statement 20/15 UPDATE


Published on 4 April 2016

Supervising building societies’ treasury and lending activities – CP12/16

Background

This consultation paper (CP) sets out proposed changes to Supervisory Statement 20/15 on the approach and expectations of the Prudential Regulation Authority (PRA) in its supervision of building societies’ treasury and lending activities.

The CP and draft supervisory statement are relevant to building societies, and should be read in conjunction with the PRA Rulebook and the PRA’s approach to banking supervision. 

Summary of proposals

The purpose of the existing supervisory statement is to set out PRA expectations in respect of societies’ lending and treasury activities, and for compliance with the requirements of the Building Societies Act 1986 and the PRA Rulebook.  It is relevant for all building societies.

The proposed new version of the supervisory statement is included as an Appendix to this CP. The revised statement (see Appendix) incorporates most of the text from SS20/15, but the material has been reorganised under six headings:

(a)   introduction;
(b)   overview of PRA expectations;
(c)   lending;
(d)   financial risk management;
(e)   changes to supervisory approaches; and
(f)    business model diversification.

The main text is supported by a number of tables included as appendices.

The introduction and overview chapters have been expanded to explain in more detail the rationale for the supervisory statement, and how it is intended to be used.

Response

The PRA welcomed views on the draft supervisory statement by Monday 4 July 2016.

PDFConsultation Paper 12/16

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