LIAC02/26: July 2026 – Low Impact Amendments Consultation
Please provide any comments on the proposed amendments to LIAP@bankofengland.co.uk by the consultation end-date for each proposal.
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Amendments to SS25/15, SS26/15 and IM.03 reporting instructions
Consultation end date: 11 September 2026
Proposed implementation date: 31 December 2026
The PRA proposes to remove Lloyd's syndicates from the scope of internal model output (IMO) reporting. This would be implemented through amendments to Supervisory Statement (SS) SS25/15 – Solvency II: Regulatory reporting, internal model outputs (paragraphs 1.1 and 2.7) to remove references to Lloyd’s syndicates. The PRA considers that this information is no longer required for its supervisory approach and duplicates data available through other UK Solvency II (hereafter referred to as ‘Solvency UK’) reporting and information shared by Lloyd’s. The PRA’s proposal supports the principle of reducing the reporting burden on firm’s and aligns with wider Solvency UK reporting reforms aimed at improving proportionality and simplification. This proposal is consistent with the PRA’s statutory objectives and overall approach to Lloyd’s supervision, including the PRA Lloyd’s Cooperation Agreement.
The PRA also proposes to make consequential amendments to:
- SS26/15 – Solvency II: ORSA and the ultimate time horizon – non-life firms (paragraph 1.6) to clarify that the option for firms to demonstrate their consideration of the ultimate time horizon using IMO within their Own Solvency and Risk Assessment supervisory reports is relevant only to those firms that are expected to report IMO; and
- the associated IM.03 reporting instructions (section 1a) to align with this proposal.
The PRA also proposes to make non-substantive updates to both SS25/15 and SS26/15 to improve clarity and consistency, remove outdated EU references, and to align these materials with the PRA’s current Solvency UK framework and approach to policy.
The PRA proposes these changes would take effect on 31 December 2026, such that syndicates would not be required to report IMOs to the PRA as part of their 2026 year-end results.
Amendments to PRA liquidity rules
Consultation end date: 11 September 2026
Proposed implementation date: 1 January 2027
The PRA proposes to make changes to the Liquidity (CRR) Part and the Liquidity Coverage Ratio (CRR) Part (‘the Liquidity Parts’) of the PRA Rulebook.
Elements of proposals 1 and 2 depend on the draft Overseas Prudential Requirements Regime (Credit Institutions and Investment Firms) Regulations 2026 (‘the OPRR’), which have been laid before Parliament, entering into force on 1 January 2027. If these regulations are not made the PRA would not proceed with these elements of its proposals.
Proposal 1: Treatment of non-UK covered bonds in the Liquidity Coverage Ratio (CRR) Part
The PRA proposes to amend Article 11(1)(d)(ii) of the Liquidity Coverage Ratio (CRR) Part of the PRA Rulebook. This requires that, for non-UK covered bonds to be eligible as level 2A liquid assets, the supervisory and regulatory arrangements in the third country are at least equivalent to those in the UK. The proposed amendment would clarify that firms are responsible for assessing those arrangements and determining whether equivalence was met — an allocation of responsibility that is not currently explicit. Where firms have assessed a third‑country regime to be equivalent, and all other eligibility criteria are satisfied, the covered bonds can be recognised as level 2A liquid assets.
The PRA also proposes to update SS24/15 – The PRA’s approach to supervising liquidity and funding risks to explain that firms (or CRR consolidation entities) would be responsible for the assessment and determination of equivalence. Firms would be expected to draw on a broad set of relevant information for the assessment of equivalence and may take assurance from any future designation by HM Treasury (HMT) under the OPRR.
Proposal 2: Consequential amendments to the Liquidity Parts of the PRA Rulebook following implementation of the Overseas Prudential Requirements Regime
The PRA proposes to amend the Liquidity Parts of the PRA Rulebook to facilitate the operation of its liquidity rules following the expected entry into force of the OPRR and associated rule changes set out in PS16/26 – PRA rule changes to accommodate HM Treasury’s Overseas Prudential Requirements Regime.
The OPRR is expected to replace CRR equivalence determinations with designations of jurisdictions made:
- in relation to exposures to overseas credit institutions, investment firms and exchanges (regulation 4 of the OPRR); and
- in relation to exposures to overseas central government, central banks, regional governments, local authorities and public sector entities (regulation 6 of the OPRR).
The OPRR also introduces a power for HMT to designate jurisdictions in relation to overseas covered bonds (regulation 5 of the OPRR). Designation of a jurisdiction has the effect of enabling firms to apply a different standardised approach (SA) credit risk treatment for calculating capital requirements.
The proposed amendments to the liquidity rules clarify that:
- designations made in relation to overseas eligible covered bonds would not affect the treatment of covered bonds under the relevant liquidity rules (except as set out in proposal 1 above); and
- designations made in other OPRR treatments which impact SA capital requirements would interact with liquidity treatments in the same way as the existing CRR equivalence determinations which these designations replace (this includes where the existing CRR equivalence determinations impact the eligibility of covered bonds for the purpose of the liquidity rules).
Proposal 3: Consequential amendments to the Liquidity Parts of the PRA Rulebook following implementation of Basel 3.1 standards and the restatement of CRR requirements
The PRA proposes a number of amendments to the Liquidity Parts of the PRA Rulebook relating to the implementation of Basel 3.1 standards in the PRA Rulebook and the restatement of CRR requirements.
These amendments are being proposed to facilitate the operation of various liquidity rules coming into effect on 1 January 2027, following:
- the implementation of Basel 3.1 standards in the PRA Rulebook as set out in PS1/26 – Implementation of Basel 3.1: Final rules; and
- the restatement of certain provisions of the CRR in the PRA Rulebook as set out in PS3/26 – Restatement of CRR requirements – 2027 implementation – final
In a number of cases, the proposed amendments would make adjustments to preserve the current effect of the liquidity rules insofar as that is possible and appropriate given the rules set out in PS1/26 and PS3/26:
- Articles 411, 424 and 428 of the Liquidity (CRR) Part currently contain references to qualification for the retail exposure class. The credit risk SA rules in PS1/26 exclude real estate exposures from the SA definition of retail exposures. The PRA proposes to amend these articles to clarify that, for real estate exposures other than asset development and construction (ADC) exposures, this exclusion does not apply for the purpose of determining qualification for the retail exposure class under the SA. This is similar to the approach the PRA has taken to the definition of default and counterparty risk weights for real estate exposures under the SA;
- The PRA proposes to amend Article 428(1)(k) of the Liquidity (CRR) Part to update cross-references. Existing cross-references to the risk categories set out in Annex 1 of the CRR will be replaced with cross-references to conversion factor categories set out in Table 1 of Article 111 of the Credit Risk: Standardised Approach (CRR) Part. The PRA considers that these proposed updates would not change the set of exposures in scope of this article. The PRA has not re-assessed the consistency of stable funding treatments of off-balance sheet items with the conversion factor treatments under the credit risk SA when formulating this proposal. In the future, it may consider whether any further changes are warranted to improve consistency;
- Article 428af of the Liquidity (CRR) Part specifies assets that are subject to a 65% required stable funding factor. These include unencumbered loans secured by mortgages with a residual maturity of one year or more which are assigned a risk of 35% or less under the credit risk SA, and certain other unencumbered loans which are also assigned a risk of 35% or less. PS1/26 introduced a number of changes to the SA risk weight treatment of mortgages and other exposures. The PRA proposes to retain the 35% risk weight criteria in its updates to Article 428af, including updated cross-references to the SA rules. As a result, the revised credit risk SA treatments would be relevant for determining the applicable required stable funding factor with effect from 1 January 2027.
The PRA proposes to update a number of existing cross-references to CRR provisions in the liquidity rules with references to the PRA Rulebook. The PRA plans to make further updates to remaining CRR cross-references in due course.
The PRA proposes to delete references to the liquidity treatment of trade finance off-balance sheet related products in the PRA’s liquidity rules from Article 111 of the Credit Risk: Standardised Approach (CRR) Part, and replace these with equivalent provisions in Articles 428s and 428ra of the Liquidity (CRR) Part. The PRA considers that this proposal would improve the useability of its rulebook.
The PRA proposes that the amendments set out in the three proposals above would take effect on 1 January 2027, in line with the implementation of the Basel 3.1 standards in the PRA Rulebook, the restatement of CRR provisions in the PRA Rulebook, and the expected introduction of the OPRR.