LIAF02/26 – Low Impact Amendments Finalisation July 2026

LIAF02/26 – finalising LIAC01/26; and other minor updates and corrections made without further consultation

Final policy following April 2026 Low Impact Amendments Consultation

In LIAC01/26 the PRA consulted on the following proposals:

1. Amendments to the Groups Part of the PRA Rulebook
2. Consequential amendments to a collection of PRA rules relating to the Capital Requirements Regulations 2013
3. Amendments to the Countercyclical Capital Buffer Rates UK Technical Standard
4. Amendment to the frequency of the O-SII designation exercise in Statement of Policy (SoP) 1/16 – The PRA’s approach to identifying other systemically important institutions (O-SIIs)
5. Amendments to the definition of firms in scope of the O-SII buffer in SoP1/16 and SoP4/16 – The PRA's approach to the implementation of the O-SII buffer
6. Amendments to SoP1/20 – The PRA’s approach to the publication of Solvency II technical information

The PRA received one response to the consultation. This related to proposal 1 (amendments to the Groups Part of the PRA Rulebook) and proposal 3 the (amendments to the Countercyclical Capital Buffer Rates UK Technical Standard). This response, the PRA’s feedback, and the resulting changes to the policy consulted on are summarised below.

The PRA received no responses relating to proposals 2, 4, 5 and 6. The PRA will finalise proposals 2,4 and 5 without any significant changes to the draft rules and policy material consulted on. For proposal 6, the PRA has made minor amendments to its proposed updates to SoP 1/20, which are intended to improve clarity and do not alter the substance of the policy.

The rule amendments relating to proposal 2 will come into effect on 1 January 2027. The SoP amendments relating to proposal 4, 5 and 6 will come into effect on 29 July 2026.

Amendments to the Groups Part of the PRA Rulebook: Summary of responses, PRA feedback and changes to draft policy

In LIAC01/26, the PRA proposed amending its rules to clarify that a firm must apply proportional consolidation when a participation arises as a result of its voting rights, not just its share of capital. This included amending Article 18(5) of the Groups Part of the PRA Rulebook as finalised in policy statement (PS) 3/26 – Restatement of CRR requirements – 2027 implementation – final from 1 January 2027 to include the reference to voting rights.^{footnote [1]}

One respondent argued that referring to voting rights within Article 18(5) of the Groups Part made it unclear as to whether voting rights or share of capital take precedence in cases where a firm holds different percentages of share capital and voting rights in an undertaking that it is required to proportionately consolidate under that rule. They therefore asked the PRA to clarify:

• whether it was the higher percentage that should take precedence where a firm was calculating whether or not it holds a participation; and
• that, where a firm has both voting rights and a share of capital, the proportion to be consolidated should be based on share of capital held.

The PRA notes that a participation arises where a firm owns 20% or more of the voting rights or capital of an undertaking. A firm should continue to determine whether it has a participation based on that definition.

However, as noted in LIAC01/26, the PRA’s rule requiring the proportional consolidation of a participation currently only refers to a firm’s share of capital in an undertaking. So, the PRA proposed to remove the unintended inconsistency in its rules by referring to voting rights as well as share of capital.

The PRA acknowledges the respondent’s feedback that this change may make it unclear as to which proportion of an undertaking they should include for the purposes of prudential consolidation. The PRA has therefore updated SS15/13 - Groups to set out its expectations around the amounts to be proportionately consolidated. These are that:

• Where a firm only holds voting rights, it should proportionately consolidate according to its share of the voting rights of the undertaking; and
• Where a firm holds voting rights and capital in different proportions, it should proportionately consolidate based on its share of capital. A firm may, however, opt to proportionately consolidate based on its share of voting rights where this is higher than its share of capital and the firm determines that that proportion better reflects the economic substance of its holding.

The PRA will make the changes to its Rulebook as consulted on. The rule amendments in Annex A will come into effect on 30 July 2026. The rule amendments in Annex B will come into effect on 1 Jan 2027, to ensure the policy position remains unchanged once CRR restatements apply. The changes to SS15/13 will be implemented from 1 January 2027, but firms may refer to them for guidance in the meantime.

Amendments to the Countercyclical Capital Buffer Rates UK Technical Standard: Summary of responses, PRA feedback and changes to draft policy

In LIAC01/26, the PRA proposed a number of miscellaneous low impact amendments to the UK Technical Standard on the identification of the geographical location of the relevant credit exposures for calculating institution-specific countercyclical capital buffer rates (the UKTS). The PRA proposed to replace existing cross-references to provisions of the Capital Requirements Regulations (CRR) with references to the PRA Rulebook to reflect:

1. 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
2. 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.

One respondent commented on an inconsistency between the proposed amendments to the definition of ‘trading book exposures’ and the equivalent Part of the PRA Rulebook. In line with the intention of these amendments, the PRA has amended the definition of ‘trading book exposures’ in the UKTS to align with that in the Capital Buffers Part of the PRA Rulebook.

That respondent also asked for confirmation that references to incremental default and migration risk under the Market Risk: Internal Models Approach (CRR) Part of the PRA Rulebook are to maintain the current Internal Model Approach (IMA) rules, reflecting that the new Fundamental Review of the Trading Book - Internal Models Approach (FRTB-IMA) will only apply from 1 January 2028. The PRA can confirm thatthe Market Risk: Internal Models Approach (CRR) Part of the PRA Rulebook refers to the incremental default and migration risk relevant to the current IMA that applies during the IMA transitional period, and the default risk for the FRTB-IMA that applies after. When the transitional period for the current IMA expires at end 2027, the references to incremental default and migration risk will no longer be applicable while the new references to default risk will become effective.

These amendments to the UK Technical Standard will come into effect from 1 January 2027.

Minor updates and corrections made without further consultation

Amendments to the definition of ‘netting set’ in the Glossary Part of the PRA Rulebook

The PRA is correcting an error in a cross-reference in the definition of ‘netting set’ set out in the PRA’s final policy in policy statement (PS) 3/26 – Restatement of CRR requirements – 2027 implementation – final. This PS restated (among other provisions) the definition from the CRR into the Glossary Part of the PRA Rulebook, with effect from 1 January 2027. This reference is being updated to cross-refer to Section 7 of Chapter 3 of the Counterparty Credit Risk (CRR) Part and the Credit Risk Mitigation (CRR) Part of the PRA Rulebook. The PRA is also making a minor editorial correction to the same definition.

The PRA considers that it can make these amendments without further consultation as it consulted on the definition in question as part of consultation paper (CP) 13/24 – Remainder of CRR: Restatement of assimilated law. The PRA considers that no new developments have occurred that would require further consultation. These minor corrections do not change the PRA’s policy.

These rule amendments will come into effect on 1 January 2027.

Amendments to the General Notification and Regulatory Reporting Parts of the PRA Rulebook

In March 2026, the PRA published PS7/26 - Operational resilience: Operational incident and third-party reporting. The PRA is making minor amendments to correct the associated rules, specifically, the General Notification Part and the Regulatory Reporting Part of the PRA Rulebook to:

• correct Rule 2.3B (1) of the General Notification Part that Third Country Branches are excluded from the Material Third Party Notification requirements; and
• correct Rule 25.1 (5) of the Regulatory Reporting Part that UK branches of overseas banks are included in Operational Incident Reporting requirements.

The PRA considers that it can make these corrections without further consultation, as they fall within the scope of the rules consulted upon in CP17/24 – Operational resilience: Operational incident and outsourcing and third-party reporting and are in line with the approach set out in PS7/26. The PRA considers that no new developments have occurred that would require further consultation. These amendments do not change the PRA’s policy.

These rule amendments will come into effect on 18 March 2027.

Amendments to the Credit Risk: Standardised Approach (CRR) and Credit Risk: Internal Ratings Based (CRR) Parts of the PRA Rulebook and to SS10/13 - Credit Risk – Standardised Approach.

In January 2026, the PRA published PS1/26 – Implementation of Basel 3.1 Final rules which makes various changes to the PRA’s regulatory framework with effect from 1 January 2027. The PRA is making the following minor corrections to the associated rules and supervisory statements:

• a correction to Article 120(4) of the Credit Risk: Standardised Approach (CRR) Part of the PRA Rulebook to clarify that, where multiple credit ratings are available, due diligence only needs to be carried out in respect of the single credit rating selected in accordance with Articles 138 and 139 of the Credit Risk: Standardised Approach (CRR) Part for a given exposure;
• corrections to Articles 121(2) and 121(5) of the Credit Risk: Standardised Approach (CRR) Part of the PRA Rulebook to clarify that, for ‘exposures to Article 119 institutions’ where no credit rating from a nominated external credit assessment institution (ECAI) is available:
  • the Article 121(2) risk weight treatment for exposures with an original maturity of more than three months does not apply where the Article 121(4) risk weight treatment for exposures which arose from the movement of goods with an original maturity of six months or less applies; and
  • the Article 121(5) preferential 30% risk weight can, subject to the relevant conditions in that article being met, be applied as an alternative to the Article 121(2) risk weight treatment (but not as an alternative to the Article 121(4) risk weight treatment, where that treatment is applicable).
• a correction to Article 151(5) of the Credit Risk: Internal Ratings Based (CRR) Part of the PRA Rulebook to clarify the exposure value treatment for exposures subject to the slotting approach that give rise to Counterparty Credit Risk; and
• correction of inaccurate references to the PRA rulebook definition of ‘residential real estate’ in paragraphs 5.8 and 5.9 of SS10/13 – Credit Risk – standardised approach.

The PRA considers that it can make these amendments without further consultation as it consulted on these rules and this supervisory statement in CP16/22 – Implementation of the Basel 3.1 standards. The PRA considers that no new developments have occurred that would require further consultation.

These rule and SS amendments will come into effect on 1 January 2027.