Supervisory measures and penalties in relation to financial holding companies

Statement of Policy

First published on 15 September 2021

Overview

This Statement of Policy (SoP) sets out the Prudential Regulation Authority’s (PRA) approach to exercising supervisory measures over and imposing penalties upon UK parent financial holding companies and UK parent mixed financial holding companies (holding companies) pursuant to Part 12B of the Financial Services and Markets Act 2000 (FSMA), covering the taking of measures, including directions; the imposition of penalties; and the amount of penalties. 

The Capital Requirements Directive V (CRD V) requirement for approval and supervision of holding companies has been transposed in the UK through The Financial Holding Companies (Approval etc.) and Capital Requirements (Capital Buffers and Macro-prudential Measures) (Amendment) (EU Exit) Regulations 2020 (the SI). The SI inserted a new Part 12B into FSMA, and those legislative provisions have applied from Tuesday 29 December 2020.

The SI requires that holding companies make an application to the PRA for approval, or an exemption from approval, before Monday 28 June 2021. Once approved, relevant holding companies will become responsible for ensuring their group meets consolidated prudential requirements and that they continue to meet the approval criteria.

Part 12B FSMA grants the PRA the power to take certain supervisory measures and impose penalties in certain circumstances on holding companies. In addition, it imposes a requirement on the PRA to prepare and issue a Statement of Policy with respect to taking supervisory measures, the imposition of penalties, and the amount of those penalties over holding companies.

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