CP27/23 – The Prudential Regulation Authority’s approach to policy

Consultation paper 27/23
Published on 08 December 2023

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Alternatively, please address any comments or enquiries to:
Strategy and Policy Approach Division
Prudential Regulation Authority
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1: Overview

1.1 This Prudential Regulation Authority (PRA) consultation paper (CP) sets out the approach that we, the PRA, propose to take to policy under the regulatory framework as amended by the Financial Services and Markets Act (FSMA) 2023 (‘FSMA 2023’ or ‘the Act’).footnote [1] It builds on Discussion Paper (DP) 4/22 (‘DP 4/22’ or ‘the DP’) – The Prudential Regulation Authority’s future approach to policy – and is relevant to all PRA-regulated firms.

1.2 The draft Approach to Policy document (‘Approach Document’) on which we are consulting is available in Appendix 1. By consulting on our approach to policy, we are meeting our public law duty to consult widely where it is fair to do so. We are not introducing rules, and therefore the statutory duty to consult under section 138J Financial Services and Markets Act 2000 (FSMA) does not apply. Our Practitioner Panel was consulted on the proposals in this CP related to stakeholder engagement.

1.3 Our approach to policy is evolving because we are taking on wider rule-making responsibilities and enhanced accountability requirements. This is a result of reforms to our regulatory framework introduced through FSMA 2023. The Government introduced these reforms to ensure that the UK’s financial services regulatory framework is fit for the future, reflecting the UK’s position outside of the EU.

1.4 FSMA 2023 establishes the legal basis for a more British system of regulation, with most technical rules made by operationally independent regulators within a framework set by Parliament. In practical terms, this means that a set of regulatory requirements which previously existed in statute will be expected to be replaced in the PRA Rulebook (‘the Rulebook’). We will have the power to evaluate these rules, amend rules if needed, or create new rules where required. This constitutes a step change in our rule-making responsibilities.

1.5 Consequently, the Act also introduces enhanced objectives and accountability requirements which support our transparency and accountability to Parliament. Among the new requirements is a secondary objective to facilitate the UK economy’s international competitiveness and its growth over the medium to long term, subject to alignment with international standards. We will periodically publish quantitative metrics to provide transparency around our work to facilitate competitiveness and growth. The full list of metrics which we will publish is available in Appendix 2. We are providing the list of metrics for information and are not consulting on this material.

1.6 Our ambition is to be a strong, accountable, responsive, and accessible policymaker, and we have invested significantly in our internal processes so that we can deliver on our new responsibilities. We intend to maintain robust prudential standards, which are the cornerstone of UK financial stability and long-term economic growth, while addressing risks and opportunities in a responsive manner, appropriately adapted to the circumstances of the UK.

1.7 The DP preceding this CP was published in September 2022, as Parliament was considering the Financial Services and Markets Bill (‘FSM Bill’), which became FSMA 2023. It covered our approach to our statutory objectives and regulatory principles, our approach to international engagement and collaboration, the policy cycle, and our ambitions to reform our Rulebook. Our intention was to provide stakeholders with the opportunity to input early and to share views on how we can refine our approach.

1.8 We received 22 responses to the DP. There were representations from across industry and civil society groups, including consumer advocacy groups, non-governmental organisations, and academia. We are grateful for the constructive and considered engagement from our stakeholders.

Structure of the CP

1.9 The draft Approach Document builds on the DP and is informed by the responses we received. In certain areas our proposed approach will take time to embed fully; for example, our reforms to the Rulebook will take time to implement and are contingent on decisions taken by HM Treasury (HMT) regarding the repeal and replacement of retained EU law in PRA rules.

1.10 The draft Approach Document has developed most substantively on the DP in the following areas:

  • Chapter 2 – we have updated our legal framework to reflect amendments made by Parliament to the FSM Bill before it was enacted.
  • Chapter 3 – we have provided more detail on our approach to the secondary competitiveness and growth objective.
  • Chapter 5 – we have provided more detail on how we propose to engage stakeholders through the policy cycle.
  • Chapter 6 – we have incorporated a number of stakeholder suggestions on reform of the Rulebook.

1.11 We expect our proposed approach to have a material impact on policy development once fully implemented. The table below summarises the key areas in which we propose that our approach should change:



Regulatory Principles

We propose to ‘cluster’ regulatory principles which are similar to each other in order to support our analysis and its presentation. This will support our efficiency and agility as a policymaker. We will continue to consider all relevant factors and the differences between individual regulatory principles.

Secondary competitiveness and growth objective

We propose to take a proactive approach to the secondary competitiveness and growth objective, and it will have a material impact on how we develop policy. We will advance the objective by maintaining trust in the PRA and UK prudential framework, adopting effective regulatory processes and engagement, and ensuring that our rules account appropriately for UK circumstances.

International standards

We propose to target being ‘largely compliant’ with international standards, which we view as consistent with faithfully implementing international standards. Following the enactment of FSMA 2023, and after the process of repeal and replacement of retained EU law, we have some flexibility over how we implement international standards, and which firms they apply to. We therefore propose to adjust our implementation of international standards in certain circumstances. For example, we can adjust our implementation to account more effectively for UK market circumstances.


There will be enhanced transparency and independent scrutiny of our Cost Benefit Analysis (CBA) following the establishment of a CBA Panel (composed of external experts), as required by FSMA 2023. We are preparing to consult separately on our approach to CBA.


We will have more opportunities to review our rules as retained EU law is repealed and replaced in PRA rules. We can respond as appropriate when evidence emerges that rules are producing unintended consequences.


We will need data from firms in relation to policy development, so that we can meet our new accountability requirements under FSMA 2023, and take advantage of our broader rulemaking powers in certain areas (e.g. evaluation). However, work is underway to streamline regulatory returns data, reducing the data burden on firms across banking and insurance.

Stakeholder engagement

We propose to adopt a flexible approach to engagement with our stakeholders through the cycle. Stakeholder engagement will inform our consideration of the secondary competitiveness and growth objective and evaluation, while also enabling us to account effectively for UK circumstances. We also propose to engage a wider range of stakeholders so that our policymaking is informed by a diversity of viewpoints.

PRA Rulebook

We propose to reform the Rulebook to improve its accessibility, efficiency, usability and clarity. We intend for our reforms to make it easier for stakeholders to engage with our regulatory material.

Responses and next steps

1.12 This consultation closes on Monday 08 April 2024. We are providing stakeholders with four months to respond given the breadth of topic areas covered, and because the consultation coincides with the holiday period. We invite feedback on the proposals set out in this consultation. In particular, we welcome feedback on our approach to:

  • the secondary competitiveness and growth objective;
  • implementing international standards. In particular, whether we should commit to achieving a ‘largely compliant’ rating at international fora; and
  • stakeholder engagement.

1.13 Please address any comments or enquiries to CP27_23@bankofengland.co.uk. Please indicate in your response if you believe any of the proposals in this CP are likely to impact persons who share protected characteristics under the Equality Act 2010, and if so, please explain which groups and what the impact on such groups might be.

2: Our proposals

The Prudential Regulation Authority’s approach to policy

2.1 In this section we provide a short summary of the content of each chapter in the Approach Document. We summarise the feedback received on DP 4/22 chapter by chapter, and we explain how the proposals in each of the corresponding chapters in the Approach Document have changed following consideration of that feedback and enactment of the FSM Bill. We also explain where feedback has not resulted in a proposed change to our approach. This summary of feedback is not exhaustive: rather, it is intended to capture the key themes emerging from the feedback. Additionally, we received feedback relating to specific policies. This feedback is not within the scope of our Approach Document, but it will be considered internally as part of the policy-making process.

Chapter 2: Our objectives and regulatory principles

Chapter summary

2.2 Chapter 2 of the Approach Document describes our framework of objectives and regulatory principles in factual terms. It sets out the legal basis of our objectives and regulatory principles, and how these objectives and regulatory principles relate to one another.footnote [2] It also sets out how the regulatory principles can be clustered into thematic groupings.

2.3 The DP highlighted three key changes arising out of the Government’s review of our regulatory framework. These were: (i) the introduction of a secondary competitiveness and growth objective, (ii) the introduction of a new principle requiring us to ‘have regard’ to the government’s 2050 net-zero target, and (iii) the creation of a power enabling HMT to add further activity specific regulatory principles through secondary legislation. We did not invite stakeholders to provide feedback on this chapter given it was a factual description of our legal framework, as established by Parliament.

How the chapter has changed

2.4 We have made changes to the Approach Document to capture two new requirements added to the FSM Bill during its parliamentary passage. First, the new net-zero regulatory principle to which we must ‘have regard’ as we exercise our general functions has been expanded to include the need to contribute towards achieving compliance by the Secretary of State with section 5 of the Environment Act 2021 (environmental targets). Second, we are now required to have regard to HMT policy statements on Sustainability Disclosure Requirements (SDR) when making rules or issuing guidance in connection with disclosure concerning matters relating to sustainability.

2.5 Our framework of regulatory principles is subject to further change. New principles can be applied through HMT’s recommendations letter to the Prudential Regulation Committee (PRC), or through exercise of a new power given to HMT by FSMA 2023 which enables HMT to add further, activity specific, regulatory principles through secondary legislation. We will capture changes to our regulatory framework as we update the Approach Document over time.

Chapter 3: Our approach to our objectives and regulatory principles

Chapter summary

2.6 Chapter 3 sets out our proposed approach to advancing our primary and secondary objectives, and accounting for our regulatory principles. With respect to the primary objectives, we explain that strong prudential standards are a vital safeguard of UK financial stability, and that financial stability supports vital economic activity across the UK. We explain that strong standards mitigate the risks of financial crises. Additionally, by supporting a stable financial system, they also make the UK an attractive place for international firms to do business.

2.7 The chapter explains how we take a proactive approach to our existing secondary competition objective, and that we propose to do the same for our new secondary competitiveness and growth objective. We propose to prioritise opportunities to advance it, and we will ensure our programme of work has a meaningful impact on competitiveness and growth.

2.8 We explain that our wider rule-making responsibilities should enable us to be more responsive to innovation and to make rules that are more accessible, more proportionate and better adapted to the UK financial system (especially if doing so does not threaten alignment with international standards or increase the regulatory burden for internationally active firms).

2.9 We also explain that we view the competitiveness and growth objective as consistent with strong standards. We do not propose to weaken standards to boost competitiveness and/or growth in the short run if this undermines medium-to-long-term growth by increasing financial stability risks.

2.10 We also set out our proposed approach to our regulatory principles. When pursuing our objectives, our proposed approach is to review all the regulatory principles, identify which are relevant to the proposed policy, and judge the extent to which they should influence the policy outcome. We describe how we ‘cluster’ related regulatory principles into thematic groupings to support the efficiency and agility of our policymaking process. We view this as an effective means of accounting for the significant thematic overlap across different regulatory principles.

2.11 The DP invited stakeholders to provide feedback on our proposal to take a proactive approach to the new secondary objective, and how we can do this effectively. We also asked stakeholders to provide feedback on our approach to the clustering of our regulatory principles.

How the chapter has changed

Secondary competitiveness and growth objective

Our proactive approach

2.12 Respondents to the DP generally welcomed our proposal to take a proactive approach to the secondary competitiveness and growth objective, and our intention that the objective will have a material impact on policy outcomes. Respondents were in broad agreement that competitiveness and growth should be advanced without weakening financial stability. Respondents also recognised that financial stability supports the UK’s attractiveness as a financial centre.

2.13 However, some respondents to the DP were concerned that we would be too cautious in advancing the secondary competitiveness and growth objective. Other respondents expressed concern that the new competitiveness and growth objective might reduce our focus on our primary objectives. We make policy in line with the legally binding regulatory framework established by Parliament. FSMA requires that we make policy to advance our primary objectives. These rank above all other considerations. However, we consider a range of options when developing a policy that advances our primary objective, a number of which may appropriately advance the secondary objectives. In a given case, where different options are available, we should choose an option that appropriately promotes our secondary objectives while also pursuing our primary objectives. We have not made changes to our approach regarding this subject in the Approach Document.

2.14 As stated in the DP, we are committed to seeking out opportunities to advance the new secondary competitiveness and growth objective where it does not undermine our primary objectives.

How we can facilitate competitiveness and growth

2.15 Respondents to the DP also commented on which factors we should consider as we facilitate competitiveness and growth. Respondents suggested that we should consider factors such as: openness to foreign business, proportionate implementation of international standards, the removal of outdated requirements, resource allocation, export of services, regulatory predictability, and the costs to firms and consumers.

2.16 The views of DP respondents have informed the approach we propose to take. In the Approach Document we have expanded on our approach to the secondary competitiveness and growth objective by providing clarity on: (i) the channels through which competitiveness and growth can be facilitated; (ii) the domestic versus international dimensions of competitiveness and growth; and (iii) the action we can take in support of competitiveness and growth.

2.17 Regarding the channels, we are clear that a wide range of factors influence the growth and competitiveness of the UK, as both a domestic and global financial centre, and that some of these factors are outside of the regulator’s control. Our proposed approach is to focus on those we have some control over. We identify three channels through which we can facilitate the growth and international competitiveness of the UK financial sector and/or wider economy: (i) capital allocation; (ii) ability to sell; and (iii) ability to attract.

2.18 In terms of the different dimensions to competitiveness and growth, we consider that there are both international and domestic dimensions. The domestic dimension relates to efficient capital allocation within the UK and the ability to attract investment to the domestic economy. The international dimension relates to the UK’s role as a hub for international trading activity, attracting firms and selling UK services overseas. In our view the secondary competitiveness and growth objective encompasses both of these dimensions, and both dimensions bring value to the UK financial sector and the wider UK economy.

2.19 With respect to the direct action we can take to facilitate the objective, we propose to activate the transmission channels by strengthening three regulatory foundations. These are: (i) maintaining trust among domestic and foreign firms in the PRA and UK prudential framework; (ii) adopting effective regulatory processes and engagement; and (iii) adopting a responsive and responsibly open approach to risks and opportunities. The Approach Document provides detail on our approach under each foundation.

Transparency and reporting

2.20 In line with our requirements under FSMA 2023, we will publish reports on our progress in implementing the secondary competitiveness and growth objective within the 12 and 24 months after it was brought into force (including quantitative metrics and an accompanying narrative). Looking further ahead, we propose to report on this annually via our annual reports – as we do for our secondary competition objective. Our updated Approach Document reflects this proposal.

2.21 Respondents to the DP expressed a desire for us to publicly set out quantitative metrics so that our work to facilitate competitiveness and growth can be monitored. Moreover, HMT collected industry views on which metrics would be most appropriate for regulators to publish through the Call for Proposals “Financial Services Regulation: Measuring Success”.

2.22 We are committed to being transparent and accountable, and we recognise that appropriately selected metrics are an important part of this. Annex 2 presents a complete list of metrics we intend to publish. They are grouped under the competitiveness and growth regulatory foundations presented in our Approach Document. The metrics in this list, which has been developed on the basis of industry and HMT’s feedback, measure the extent to which we achieve the outcomes embedded in the foundations.


2.23 There were a range of specific suggestions as to where we should focus our efforts to enhance the UK’s competitiveness. Suggestions included supporting green growth and encouraging innovation in sustainable finance and fintech. There were also suggestions as to specific policies we should prioritise for review. Another respondent suggested that we consider implementing development strategies for the areas that are judged to be of competitive importance to the UK.

2.24 Our Approach Document does not identify specific areas or policies for prioritisation, as it is intended to describe our general approach. However, we recognise the need to prioritise where we will focus. We welcome input from stakeholders on an ongoing basis as we look to advance the objective, which will help inform our ongoing prioritisation. For example, our Approach Document recognises that we can support competitiveness and growth by being responsive to innovation.


2.25 Some respondents to the DP were of the view that a cultural shift within the PRA is required to facilitate the advancement of the secondary competitiveness and growth objective, and others suggested a change to our operating structure. We agree it is important that our internal approach supports the advancement of the secondary competitiveness and growth objective. We have therefore implemented mandatory training internally on the new secondary competitiveness and growth objective, and we have invested in a specialist team dedicated to the new secondary competitiveness and growth objective.

2.26 We have also adapted our internal processes to ensure the objective is considered consistently and appropriately. For example, internal policy papers for senior committees are required to set out the anticipated impact of our actions on our secondary objectives, including the secondary competitiveness and growth objective.footnote [3] Additionally, our approach to stakeholder engagement will support our consideration of the new secondary competitiveness and growth objective by enabling our stakeholders to share views on issues we should consider. Our operational structure is beyond the scope of our consultation, and we have therefore not addressed this in the Approach Document.

2.27 A selection of DP respondents urged us to remember the lessons of the 2007–08 financial crisis, and to avoid exposing the UK to financial stability risks by lowering standards. Our proposed approach is to maintain robust prudential standards. In the DP we highlighted the consequences of financial crises, and how strong standards help mitigate against such crises while supporting competitiveness and growth in the medium to long term. Additionally, in describing our proposed approach to the new secondary competitiveness and growth objective, the DP emphasised the importance of not comprising standards for short run improvements to competitiveness and growth. Therefore, we consider the DP to be consistent with this feedback and we have not changed the proposals in the Approach Document in this area.

Regulatory Principles

2.28 Respondents to the DP generally welcomed our approach to the regulatory principles and were broadly positive about the proposed approach to clustering. However, some argued that clustering should be done on a case-by-case basis, rather than by default. These respondents were concerned we would lose sight of the individual regulatory principles. Similarly, another respondent said that clustering should not result in policy silos, without linkages across the thematic groupings being considered.

2.29 The clustering approach is designed to support efficient analysis and presentation by capturing overlaps where they exist. Our proposed approach is to cluster on a case-by-case basis. We are alert to the nuances of each regulatory principle and consider the differences between the individual regulatory principles. Regarding the risk of ‘silos’, the thematic groupings are not intended to narrow the lens through which we consider the regulatory principles. We recognise that certain regulatory principles are relevant across thematic groupings. For example, the proportionality of our regulation has implications for both competition and competitiveness. We have therefore updated the Approach Document to clarify our proposed approach here.

Chapter 4: Our approach to international engagement and collaboration

Chapter summary

2.30 Chapter 4 of the Approach Document describes how the integrated nature of the global financial system benefits the UK, while also creating vulnerabilities. International engagement, and implementing international standards, help us to address these vulnerabilities. Active engagement in international policy development also supports the UK’s status as a global financial centre.

2.31 The Approach Document emphasises that as a large, systemic, and open financial centre, we must invest significantly in international engagement and adopt a strong commitment to implementing international standards. We also highlight that there are circumstances where we adjust our implementation of international standards when guided by evidence, and when data suggests an alternative approach would achieve the same outcome. The Government’s reforms enable us to account more effectively for UK circumstances when implementing international standards. Chapter 4 also describes our approach to advising HMT on its equivalence decisions.

2.32 We invited respondents to provide feedback on our approach to implementing international standards, and the costs and benefits of adjusting how international standards are implemented. Respondents were also invited to share views on whether they support our international engagement strategy.

How the chapter has changed

Implementing international standards

Adjusting our implementation

2.33 Respondents to the DP were in broad agreement that a robust commitment to implementing international standards helps us advance our primary and secondary objectives and supports financial stability. There was also strong support, in principle, for our proposal to adjust implementation of standards in certain circumstances.

2.34 Views varied on the factors we should consider when adjusting our implementation of international standards. For example, some respondents noted the importance of considering the new secondary competitiveness and growth objective when we implement international standards. Others cautioned that while adjustments can be necessary, we need to be mindful of the costs this can impose on firms that are internationally active. Some respondents warned that adjusting international standards should not result in a weakening of the regulatory framework.

2.35 We consider respondent feedback to be consistent with the approach we set out in the DP. We have therefore not updated our proposed approach in the Approach Document. Our proposed approach is to consider adjustments when: (i) market developments mean the standard is no longer proportionate to the risk; (ii) other jurisdictions have adjusted their implementation in a manner that has implications for our new secondary objective or regulatory principles; and (iii) the evidence shows that the standard does not account for the UK’s specific market circumstances. As described in the DP, we are also alert to the costs imposed by the fragmentation of rules across jurisdictions on internationally active firms.

2.36 Although we have not revised our proposed approach, we have updated the Approach Document to provide greater clarity on which kinds of jurisdictions we propose to prioritise when comparing our regulations and considering our relative standing. Our proposal is to prioritise comparable jurisdictions which host global financial centres. However, we also recognise that there may be circumstances where other (for example, smaller) jurisdictions are more relevant.

Faithful implementation

2.37 There were concerns among some respondents to the DP that a commitment to faithfully implement international standards limits our flexibility, and that a commitment to ‘alignment’ would be more appropriate. We invest significantly in the process to develop international standards, and we consider it important that we adopt a strong commitment to implementing the standards we agree with our partners. However, ‘faithful’ implementation is not meant to imply that we are inflexible, or that there is no scope for adjustments or a more proportionate approach to implementation where warranted. Under the new framework resulting from the implementation of FSMA 2023, we have greater flexibility to implement standards in a way that accounts for UK market circumstances.

2.38 To provide stakeholders with greater clarity and predictability around how we will implement international standards, we have updated the Approach Document to clarify that we propose to target being at least ‘largely compliant’ with international standards.footnote [4] This approach is consistent with faithful implementation, which allows scope for adjustments where warranted. Explicitly targeting a ‘largely compliant’ rating would enhance predictability around implementation by defining the scope we have to adjust international standards to UK circumstances - while aligning internationally and maintaining our influence in global standard setting bodies. We welcome views from respondents on whether we should target being at least ‘largely compliant’ with international standards.

2.39 A number of respondents to the DP were of the view that we exceed (or ‘goldplate’) international standards unnecessarily, and that this should not be done without strong evidence. Given the UK is a large and systemic financial centre, we may occasionally be required to exceed international standards to advance our objectives. This may be more likely in insurance than banking, given international standards in insurance are at an earlier stage of development. We agree with respondents that international standards should not be exceeded without strong evidence, and it is not a course of action we pursue lightly.

International engagement

2.40 DP respondents were very supportive of our proposed approach to international engagement. A small number of respondents suggested areas where we could enhance our approach, such as bilateral engagement and Memoranda of Understanding (MoU). Our Approach Document sets out our proposed general approach, rather than specific engagement strategies. However, as a general principle, we recognise the importance of looking for opportunities to deepen our engagement. We have updated the Approach Document to clarify that this is an important component of our engagement approach.

2.41 The international standards development process was cited as an area where we could improve our stakeholder engagement, particularly in the early stages. We take a flexible approach to stakeholder engagement and consider what form of engagement is appropriate in each circumstance. Early engagement is typically feasible when we are seeking input on long-term emerging risks or where the broad parameters of the policy area are clear – but not on specific policy proposals. Regarding international standards, there are a set of constraints specific to this process which make engagement challenging. For example, there can be greater confidentiality requirements which limit our ability to engage stakeholders in the early stages. We have, therefore, not updated the Approach Document to include specific proposals or commitments on engagement around international standards.

Chapter 5: The Policy Cycle

Chapter summary

2.42 In Chapter 5 we set out our proposed approach to creating and maintaining our policy framework, which we refer to as the policy cycle. We explain that the policy cycle consists of four phases: initiation, development, implementation, and evaluation; and we explain the approach we take to each phase.

2.43 We noted in the DP that there are improvements and changes we are making through the policy cycle. These are necessary in light of our new rule-making responsibilities and accountability requirements. We invited respondents to provide feedback on our proposed approach to stakeholder engagement, evaluation, and data. We received a high volume of feedback in these areas, and respondents also shared views on our approach to CBA.

How the chapter has changed

Stakeholder engagement

2.44 Stakeholder engagement is increasingly important given our broader policy-making responsibilities. The evidence provided by stakeholders supports more informed policymaking. It also enables us to account more effectively for UK circumstances. Moreover, a dynamic approach to stakeholder engagement would help us to advance the new secondary competitiveness and growth objective.

2.45 In the DP, we proposed engaging our stakeholders more proactively through the cycle, particularly as we initiate and evaluate policy. We described our intention to engage a wider range of stakeholders, so that our policymaking encompasses views from across society. Additionally, we outlined our intention to engage across a wider variety of channels and formats.

2.46 Our updated Approach Document sets out how we propose to engage our stakeholders through the policy cycle. Our proposed approach is to be flexible and proportionate, and to vary the methods and level of engagement according to the circumstance in question.

When we engage

2.47 We propose to engage through the cycle. When approaching a given policy, we think about when we can gather stakeholder views most effectively. Typically, this is during the consultation period (during the development phase), as we can present developed policy proposals for stakeholders to share views on.

2.48 Some respondents to the DP noted that our views can appear fixed by the time we consult. These respondents stressed the importance of engaging early so that stakeholders can shape the direction of policy from the outset. We agree that early engagement is important, and our updated Approach Document therefore provides greater clarity on when we propose to engage early. Early engagement is most feasible when we are seeking stakeholder views on long-term emerging risks and our horizon scanning work, or where the broad parameters of policymaking are already known. In some circumstances we can also provide stakeholders with early opportunities to input through engagement with our Practitioner Panels.

2.49 However, the Approach Document clarifies that, generally speaking, we cannot engage stakeholders on specific policy proposals pre-consultation or engage in a manner which risks exposing market sensitive information selectively. Moreover, we reiterate that our views are not fixed at consultation, and we are receptive to views which challenge our own analysis; particularly when stakeholders provide evidence to support their assertions.

Methods of engagement

2.50 DP respondents expressed a wide range of views about how we should engage, and which methods we should use. Examples included greater use of standing panels, roundtables, and webinars. Some respondents called for longer consultation windows. We propose being open to a range of methods, and in line with our flexible approach, we plan to consider which methods are appropriate in a given circumstance.

2.51 One respondent suggested we hold some PRC meetings – or certain parts of meetings - in public. The market sensitive, confidential nature of the meetings means this would not be feasible. Another respondent suggested we use speeches to explain actions, judgements, and analysis. We see publications as the primary vehicle to provide this information. Duplicating this work through speeches would not be efficient. However, we continue to view speeches as a valuable tool to provide stakeholders with early insights into how we are thinking about a given risk.

2.52 Our updated Approach Document explains that when deciding on the right method, we propose to consider factors such as resourcing (within firms and the PRA), the complexity of the policy area, and time constraints. For example, when PRA resources are constrained or there is a particular urgency, we would be more likely to host a webinar than publish a policy paper. If a policy area is highly technical or operationally impactful and firms may benefit from having more time to respond, we would be more likely to extend the consultation window.

Who we engage

2.53 Respondents to the DP were supportive of our proposal in the DP to engage a wider range of stakeholders where possible (eg academics, consumer advocacy groups, and non-governmental organisations). Respondents noted the tendency of industry (and large firms in particular) to dominate the engagement process. Civil society groups were particularly supportive and made specific proposals such as secondments between the PRA and civil society groups to help build relationships.footnote [5]

2.54 We recognise resource constraints among civil society groups can limit their ability to engage effectively, and to build relationships with us. Therefore, we propose to proactively engage these groups, and to make them aware of consultations where their views and expertise may be valuable. We have updated the Approach Document to reflect this.

2.55 We also propose to invite civil society representation to the engagements we convene where appropriate. We will place greater emphasis on ensuring the outputs of existing engagement with civil society groups already convened by the Bank of England form part of our policy development. We are also considering using the Regulatory Initiatives Grid as a regular channel to highlight initiatives that could be of interest. We are grateful for the range of ideas provided by respondents and will continue to consider how we can best facilitate stronger engagement with civil society groups.

2.56 We received feedback from industry on how we engage our Practitioner Panels. DP respondents, including the Practitioner Panel, told us that tight controls on information sharing can make it difficult for Panel members to draw on relevant expertise from within their firm. We value the expertise that firms can offer. Therefore, we propose to facilitate wider information sharing where appropriate and are legally permitted to do so. The updated Approach Document reflects this.

2.57 Our intention to engage more widely also encompasses sector specific specialists such as consultancies, investor groups, law firms and think-tanks. The updated Approach Document clarifies this and recognises the contribution these groups can make.

2.58 We will facilitate wider engagement by using a wider variety of channels. The updated Approach Document explains that we will be flexible in the methods we use to gather information. Our proposed approach is to provide information in the simplest way possible, with a view to enhancing ease of understanding, particularly among non-subject matter experts.


2.59 Data is closely related to stakeholder engagement. We proposed in the DP that we would need more data from firms to support policy design and development. This is a consequence of our more responsive approach to policymaking, and our new accountability requirements under FSMA 2023. We explained that more data would help us better understand the anticipated costs and benefits of our proposals, and to calibrate our approach to reflect the UK financial system.

2.60 Some respondents agreed that having more data would enable more responsive policy development. However, most emphasised the importance of proportionality, highlighting that data requests are a significant resource burden. Stakeholders also recommended that we conduct ‘lessons learned’ exercises to understand why certain data collections have not delivered on their intended outcome.

2.61 We recognise stakeholder concerns around the data burden and wish to emphasise that we are not proposing to introduce new routine data collections as part of policy development. Our updated Approach Document clarifies that our starting point is to use the data we already have available to us through regulatory returns. However, this may not always be enough to facilitate our work in areas such as policy evaluation. In circumstances such as this, we may need to supplement our regulatory returns data through additional ad hoc data requests.

2.62 We do not, however, expect an aggregate increase in the data burden. We are already working to streamline regulatory returns across insurance and banking. These initiatives present a unique opportunity to modernise regulatory returns, and to adopt an approach that is better tailored to firm size and complexity. They also consider the efficacy of historical data collections, including those that were not successful or were challenging for industry to meet.

2.63 For example, the Banking Data Review (BDR) is focused on aligning the needs of our collections with the needs of supervisors day-to-day, and on delivering a streamlined and integrated framework with a single dictionary. Work on this is underway, targeting progress in priority areas. Near term benefits to respondents include an expected reduction in the number of templates. In insurance we have streamlined reporting requirements by removing certain reporting templates for all firms. This included deleting summary asset reporting, deleting financial stability reporting for larger firms, and expanding the quarterly reporting waiver to our ‘Category 3’ firms. Further proposals to streamline insurance regulatory reporting were included in CP12/23 – Review of Solvency II: Adapting to the UK insurance market – published in June 2023.

2.64 Respondents to the DP also informed us that we should provide stakeholders with greater clarity around the purpose of data collections. Respondents highlighted the importance of communicating the rationale for data asks clearly and engaging with industry in advance to focus our requests. Our proposed approach, therefore, is to provide as much context as circumstance allows so that firms can understand what we are looking for. We have updated the Approach Document to reflect this. Ongoing PRA initiatives to streamline regulatory returns (such as the BDR) are considering how we can improve our communication around the purpose of data requests.


2.65 Chapter 5 of the Approach Document also sets out our approach to policy evaluation, or ‘rule review’. As retained EU law is repealed and replaced in the PRA Rulebook, we will have more opportunities to review our rules. Evaluation is an important part of being a responsive regulator, enabling us to reconsider rules which are not operating as intended, or which are not appropriate for the UK market. It can inform future policy development and improve existing policies. FSMA 2023 also introduces a requirement for us to keep our rules under review and it empowers HMT to direct us to conduct rule reviews.

2.66 In the DP we proposed to strike a balance between evaluating existing policies and addressing new policy issues. We invited respondents to provide feedback on how we should prioritise which policies we evaluate. Respondents expressed a diverse range of viewpoints on how we prioritise policies for evaluation. Some respondents urged us to prioritise policies with a significant financial stability impact, whereas others proposed that significant consideration be given to the new secondary competitiveness and growth objective. Others proposed that we evaluate policies with a big climate impact.

2.67 Since publishing the DP, we have consulted on our approach to evaluation separately in CP11/23. The feedback we received on the Policy Approach DP made an important contribution to the proposal set out in CP11/23 – PRA statement on the review of rules. The CP explained that we would prioritise reviews based on the following criteria: legal requirements, scale of impact, timing, contribution to meeting our secondary objectives, learning potential, and the evidence base. The final review of rules and supervisory statement (SS) will be published in due course.

Cost Benefit Analysis

2.68 Responses to the DP revealed significant interest in our approach to CBA. CBA is already an important part of our policymaking process, and we are enhancing our approach as we take on wider rule-making responsibilities. As required by FSMA 2023, we are also establishing a CBA Panel. Having a CBA Panel will enhance our transparency, and the Panel will scrutinise PRA policymaking by providing regular, independent input into our CBAs. In October 2023 we published a Statement of Policy (SoP) on our approach to appointing members to our statutory panels.

2.69 Respondents made several proposals for how we can improve our approach to CBA. Proposals included: taking account of societal needs, the impact of policies on business models, and climate and nature considerations. Some respondents also said that we should do more to account for the cumulative impact of policies on firms, not just the impact of individual policies. Some respondents also suggested that there should be more opportunities to input on what is considered as part of specific CBAs.

2.70 FSMA 2023 requires that we publish a statement of policy on our approach to CBA. We are therefore preparing to consult on our approach to CBA separately. We are grateful for the proposals and suggestions we received in response to the DP, and we are considering these as we prepare for the CBA consultation. This separate consultation will come after the CBA Panel has been established as we must consult the Panel on our approach.

Chapter 6: The Rulebook

Chapter summary

2.71 Chapter 6 of the Approach Document describes our approach to our Rulebook and the principles that guide this approach. In the DP, we described the complex nature of the current regulatory framework after the UK’s exit from the EU. We recognised that the current regulatory framework can be difficult to navigate, partly because it sits across a range of sources, including retained EU law, as well as PRA requirements. We outlined how we would use the opportunities enabled by FSMA 2023 and our new policy-making approach to streamline the current framework, delivering a first-rate Rulebook.

2.72 In the Approach Document, the Rulebook chapter is structured around four proposed principles that will guide how we develop the Rulebook over time. These are: accessibility, efficiency, usability, and clarity. We propose to increase accessibility by developing an easy-to-use website. We plan to improve efficiency by reducing the number of policy document formats, and as redundant and duplicative regulatory material is deleted. To support usability and clarity, we propose to take a consistent approach to the structure of, and language in, our policies.

2.73 The speed at which we achieve our ambitions for the Rulebook will partly depend on the Government’s approach to the repeal of relevant retained EU law and its replacement in PRA Rules. Reforms cannot be completed until relevant retained EU law is repealed and replaced in PRA rules. That, alongside the resource required to implement the reforms, means it will take some time to deliver on our ambitions. In the interim, we will continue to deliver early benefits to respondents. We have already introduced the Prudential and Resolution Policy Index, which allows users to more easily find relevant policy across sources by topic area.footnote [6]

How the chapter has changed

2.74 We have updated our proposed approach to reflect DP respondent feedback on which reforms we should prioritise, and to incorporate specific recommendations on how we can improve the Rulebook. Broadly speaking, feedback indicated that improving accessibility is a priority and that respondents would benefit significantly from tools which enable them to navigate the Rulebook more efficiently. This is where we therefore propose to focus our reforms. Changes to the chapter are set out in greater detail below.


2.75 Respondents to the DP commented on the issues caused by fragmentation of the Rulebook, and broadly agreed with our proposed approach to addressing this. To mitigate the issues caused by fragmentation, we have already taken steps to streamline our policy document formats. In 2022, we:

  • published a policy statement (PS) which deleted UK Technical Standards for own funds regulations and replaced relevant material in the Rulebook; and
  • published a PS deleting thirteen legacy EU guidelines that are no longer relevant.


2.76 Respondents broadly agreed with our proposal to make regulatory material easy to access, and a range of specific proposals were made. We have considered these proposals and made a number of updates to the Approach Document to reflect these.

Links to regulatory material

2.77 One respondent suggested including hyperlinks to applicable European Banking Authority (EBA) Guidelines. These links are currently available in the Prudential and Resolution Policy Index (Policy Index) organised by topic areas. We have updated the Approach Document to describe that we propose to provide those links in the Policy Index for as long as the guidelines remain applicable. We plan to review all EBA Guidelines. Over time, we propose to move relevant content into the Rulebook. Content that is not moved into the Rulebook will be deleted.

2.78 The Approach Document has been updated to clarify that we propose to include links to SSs and statements of policy (SoP) in the Rulebook, following respondent feedback. There are additional channels and vehicles through which we communicate with our stakeholders on policy matters, such as through speeches and letters to executives of regulated firms. Our approach is to make these communications accessible and to clarify their legal standing. We are considering how to do this most effectively.

Search tools and time travel functionality

2.79 One respondent to the DP proposed that we develop a granular search tool for policy documents. This would support our plans to make the Rulebook more accessible for respondents. We have therefore updated the Approach Document to reflect that we propose to introduce a search function on our updated Rulebook website that allows users to search rules and guidance (SS/SoP) and identify relevant material by sector.

2.80 Some respondents want to be able to see clearly when changes to rules took effect. We agree that it is important to provide respondents with a clear view of how regulatory material has changed over time. While there is already a time-travel function available on the current Rulebook website showing when rule changes took effect, we propose that the new Rulebook improves on this by having a visual timeline. This would allow users to see all rule change points in a Part, and to access the past versions of a rule. This is not currently available for SSs and SoPs, but we propose to develop this function for the Rulebook. This change is reflected in the updated Approach Document.

2.81 Links to SS and SoP are not available on the existing Rulebook website, but users can see past versions of those documents on the Bank’s website. The proposed new Rulebook would digitise and incorporate SS and SoP, and provide the same time-travel functionality as for rules. However, we are not digitising past versions of those documents, so time-travel would only be available for future guidance updates.

2.82 One respondent to the DP suggested that users should be able to see what rules applied to a given authorised entity based on the permissions that it held at a given point in time. We draft our rules to be clear as possible. However, each firm is responsible for identifying and complying with the rules applicable to them. Variations in permissions and other circumstances means that granular interpretation would be necessary. We are not, therefore, proposing to pursue this option.

Rulebook structure

2.83 Another respondent suggested that we emulate the EU’s numbering approach instead of our Chapter/Part/Rule setup. Though we have kept the EU article numbering style within some areas (e.g. Capital Requirements Regulation) as an interim measure to maintain cross-references between articles, our proposed long-term approach is to maintain our own Rulebook style, which has been in place for many years. Adopting the EU approach would require significant resource. It would also mean respondents need to familiarise themselves with a new layout which differs markedly from the current layout, resulting in significant adjustment costs.

Respondent feedback on the Rulebook

2.84 Another respondent to the DP proposed that feedback from firms on the Rulebook should be sought on a rolling basis. We welcome feedback from stakeholders on our regulatory material, and we are open to views which challenge our approach. We believe that the appropriate mechanisms for this are already in place. Firms can provide feedback via their supervisors, as well as through our firm survey, practitioner panels, and responses to DPs and CPs.

2.85 Another proposal was to allow users to ‘rate’ the clarity of different rules and submit online questions and feedback on the meaning of different parts of the Rulebook. We do not propose to pursue this. As noted above, there are several existing routes that firms can take to provide us with feedback, including feedback on the Rulebook.

Usability and clarity

2.86 DP respondent feedback around usability and clarity was limited. One proposed that we engage with industry to ensure that we use inclusive and accurate terminology in our publications. Our proposed approach is to use inclusive language and to update language and terminology so that PRA terms are used consistently. This has not changed since the DP. We note in the Approach Document that we propose to make updates to policy areas over which we have control. Any such changes will form part of our public consultations.

2.87 There was some support for ‘purpose statements’. Purpose statements would be designed to summarise the purpose of our rules, and help respondents understand how the rules advance our objectives. Some respondents queried their legal status, however, and cautioned that purpose statements should not be a substitute for well-drafted rules. One respondent suggested that purpose statements may also benefit from practical examples.

2.88 In light of modest respondent support for purpose statements, and the significant resource demands of the Rulebook reforms already under way, we are not proposing to prioritise purpose statements at this time. However, they remain a longer-term consideration, and we will continue engaging with our stakeholders on this topic to understand demand for purpose statements and views on their usefulness.

Request for feedback

We would like to reiterate our thanks to respondents for their engagement with DP4/22. We look forward to considering responses to this CP, ahead of publishing our final Approach Document. We welcome feedback on the range of issues addressed in the Approach Document, and in particular our approach to:

  • the secondary competitiveness and growth objective;
  • implementing international standards. In particular, whether we should commit to achieving a ‘largely compliant’ rating at international fora; and
  • stakeholder engagement.

Equality and diversity

We consider that the proposals do not give rise to adverse equality and diversity implications for the following reasons. First, this CP does not concern a direct exercise of our policy-making powers. Second, as we have developed our proposed approach, we have been mindful of considerations around inclusivity and accessibility. For instance, we have outlined our intention to engage a broader range of civil society stakeholders as we develop policy; ensuring that our policy is informed by a wider set of views and considerations. Further, we have set out our ambitions to make our Rulebook more accessible so that our stakeholders can more easily understand our body of rules.

  1. Many of the provisions applying to us, as described in this document, are in the Financial Services and Markets Act 2000 (FSMA 2000) but were amended or inserted by FSMA 2023. However, for simplicity, we refer to FSMA 2023 when referencing these new provisions under which we are now operating. 

  2. We define regulatory principles as those principles specified in section 3B of FSMA, and other matters that we are required or should have regard to (referred to collectively as ‘regulatory principles’).

  3. Our assessment of the impact of our policies on our primary and secondary objectives is also set out in consultation papers.

  4. International bodies such as the Basel Committee on Banking Supervision (BCBS), the International Association of Insurance Supervisors (IAIS) and the International Monetary Fund (IMF) conduct assessments which review the extent to which each member jurisdiction complies with international standards. Compliance is rated across a spectrum from ‘Materially non-compliant’ to ‘Compliant’, or from ‘Not observed’ to ‘Observed’.

  5. ‘Civil society’ refers to non-industry groups and individuals such as charities, non-governmental organisations, consumer advocacy groups and academics.

  6. Prudential and Resolution Policy Index.