In this consultation paper (CP), the Prudential Regulation Authority (PRA) sets out a proposal to allow certain firms to benefit from Simplified Obligations for recovery planning (‘Simplified Obligations’), in light of the discretion the PRA has under 4(1) of the Bank Recovery and Resolution Directive 2014/59/EU (BRRD) as to whether to apply Simplified Obligations.
This CP proposes changes to Supervisory Statement (SS) 9/17 ‘Recovery planning’ that would reduce expectations for certain firms’ recovery planning. The firms concerned would be notified by the PRA that they are eligible for Simplified Obligations.
This CP is relevant to PRA-authorised UK banks, building societies, PRA-designated UK investment firms and their qualifying parent undertakings to which the Recovery Plans Part of the PRA Rulebook applies.
The PRA intends to publish a final policy statement and to notify firms that are eligible for Simplified Obligations in H2 2020. Pending consideration of the responses to this CP, the amendments to SS9/17 would apply with immediate effect once the final policy statement is published.
Responses and next steps
This consultation closes on Friday 23 October 2020. The PRA invites feedback on the proposals set out in this CP. Please address any comments or enquiries to CP10_20@bankofengland.co.uk.
The proposals set out in this CP have been designed in the context of the UK’s withdrawal from the European Union and entry into the transition period, during which time the UK remains subject to European law. The PRA will keep the policy under review to assess whether any changes would be required due to changes in the UK regulatory framework at the end of the transition period, including those arising once any new arrangements with the European Union take effect. The PRA has assessed that the proposals would not need to be amended under the EU (Withdrawal) Act 2018. Please see PS5/19 ‘The Bank of England’s amendments to financial services legislation under the European Union (Withdrawal) Act 2018’ for further details.