This consultation paper (CP) sets out the Prudential Regulation Authority’s (PRA) proposals to fix deficiencies arising from the UK’s withdrawal from the EU in the PRA Rulebook, and in relation to Binding Technical Standards (BTS) within the PRA’s remit that will be converted, or ‘onshored’, into UK law. It also sets out the PRA’s proposals on how existing non-binding PRA materials, including Supervisory Statements (SS), Statements of Policy (SoP), and the PRA approach documents should be read by firms when the UK leaves the EU. The changes proposed in this CP are amendments to ensure an operable legal framework after the UK leaves the EU.
This CP is relevant to all firms authorised and regulated by the PRA, as well as firms that are expected to have deemed permission under the ‘temporary permissions regime’ (TPR) or that seek to apply for PRA authorisation in future.
This CP is published as part of the Bank of England’s (Bank) consultation package on amending financial services legislation under the European Union (Withdrawal) Act 2018 (the ‘Act’). As explained in CP25/18 ‘The Bank of England’s approach to amending financial services legislation under the European Union (Withdrawal) Act 2018’ (‘NtA approach CP’), HM Treasury intends to delegate a power, under the Act, to the financial services regulators (Financial Conduct Authority (FCA), PRA, Bank and Payment Systems Regulator (PSR)) giving them responsibility for fixing deficiencies in onshored BTS. The delegated power can also be used by the regulators to amend deficiencies within their respective rules. Therefore, the PRA intends to make ‘EU Exit Instruments’ where appropriate, to prevent, remedy or mitigate any failure of the onshored BTS within the PRA’s remit or PRA rules to operate effectively, or any other deficiency in these BTS or PRA rules arising from the UK’s withdrawal from the EU.
As set out in the NtA approach CP, the changes proposed in this CP would take effect at 11:00pm on Friday 29 March 2019 (‘exit day’) only in the event that there is no Implementation Period. If the draft Withdrawal Agreement agreed between the UK and EU is ratified and the Implementation Period commences on Friday 29 March 2019, the proposed changes would not take effect until after the end of the Implementation Period. Further modifications to the PRA Rulebook and onshored BTS may be required to reflect any agreement that is reached between the UK and EU on their future relationship.
This consultation closes on Wednesday 2 January 2019. The PRA invites feedback on the proposals set out in this consultation. Please address any comments or enquiries to CP26_18@bankofengland.co.uk.
Responses to this CP will be shared with the FCA.
The CP including the Appendices runs to 356 pages. To be helpful to readers, we have included a complete and split version of the CP below.
Appendix 2: Draft Supervisory Statement ‘Approach to interpreting reporting and disclosure requirements post-EU withdrawal’ – included in split version above
Appendix 3: Draft update to Supervisory Statement 18/15 ‘Depositor and dormant account protection’ – included in split version above