With a foreword by Sam Woods, Chief Executive of the PRA, and Deputy Governor for Prudential Regulation, the PRA’s Business Plan sets out the workplan for each of our strategic goals to support the delivery of the PRA’s strategy, together with an overview of the budget for the period 1 March 2019 to 29 February 2020.
Our strategy for 2019/20 will be delivered through our strategic goals, extracts of which are presented below. For the full detail of our workplan against each strategic goal, see pages 6-18 in the PRA Business Plan 2019/20.
We will maintain our commitment to robust prudential regulation. In 2019/20 the focus of work will pivot from developing and implementing new policies to embedding and evaluating them. We aim to safeguard the post-crisis gains in financial resilience, reforms such as those related to recovery and resolution, and ensure regulations are working as intended, while addressing more recent challenges including those associated with EU withdrawal and operational resilience. We will continue to support the Financial Policy Committee (FPC) to ensure that our regime is also delivering on the FPC’s macroprudential objectives.
The prudential regulatory framework must be responsive to changes in behaviour and the structure of the financial system, as well as risks arising from wider issues such as climate change and geopolitics. Over the coming year we will continue to seek to identify aspects of regulation that can lead to unintended behaviour or outcomes and will work with other areas of the Bank to aid and inform our monitoring of firms and the financial environment so that the appropriate responses can be put into place. For example, we will help to ensure that the microprudential, macroprudential and resolution frameworks are coherent and consistent with one another. Where issues are identified, and good practice is available to share, we will communicate to firms at individual or sector level, as appropriate, using channels including letters, speeches, briefings, and publications.
Our objective to promote the safety and soundness of PRA-authorised firms is delivered in part through ensuring that firms have adequate financial resources for the risks they are running or planning to take. We assess the financial resilience of firms through our supervision at firm and sector level, and use stress testing to examine how firms cope with extreme scenarios.
Operational disruption can impact financial stability, threaten the viability of individual firms and Financial Market Intermediaries, or cause harm to consumers, policyholders and other market participants in the financial system. Operational resilience therefore continues to be a high microprudential and macroprudential priority for us and other areas of the Bank, as well as the FCA.
As part of our supervisory approach, we recognise that firms can face periods of financial stress. To ensure an efficient, competitive banking system that supports growth, firms should be allowed to fail; this means accepting that we do not operate a zero-failure regime.
Our secondary competition objective states that ‘when discharging its general functions in a way that advances its objectives, the PRA must so far as is reasonably possible act in a way which, as a secondary objective, facilitates effective competition in the markets for services provided by PRA-authorised persons in carrying on regulated activities.
Preparing for the UK’s withdrawal from the EU has been a significant focus for us since 2016, and will continue to be in 2019/20. We have approached this work guided by our statutory objectives and by the Bank’s wider objective of financial stability. EU withdrawal represents a potentially significant change in the operating environment for financial services institutions.
As part of the Bank’s commitment to improve the way we work, we will continue to drive effective prioritisation and to make our structures more fluid. We will provide targeted training and development to build expertise in our people, and will bring together people with different areas of expertise, skills and outlook to achieve our statutory objectives.
Alongside this we also published CP9/19 ‘Regulated fees and levies: Rates proposals 2019/20’ which explains how we propose to fund our budget.
Later this year we will also publish the PRA Annual Report 2018/19, which will demonstrate how we progressed activity set out in last year’s PRA Business Plan. Previous editions of PRA Business Plans and PRA Annual Reports are available in statements and reports. Please note that in 2013-2017, both reports were published in the PRA Annual Report and Accounts.
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PRA Business Plan 2019/20