PRA Regulatory Digest - April 2019

The PRA Regulatory Digest is for people working in the UK financial services industry and highlights key regulatory news and publications delivered for the month.
Published on 01 May 2019

News and speeches

PRA Business Plan 2019/20

15 April 2019

The PRA published the ‘PRA Business Plan 2019/20’ that sets out the PRA’s strategy, workplan, and budget for the coming year. Alongside this the PRA published CP9/19 ‘Regulated fees and levies: Rates proposals 2019/20’ which explains how the PRA propose to fund its budget, see the cross-cutting section for more information.

Avoiding the storm: Climate change and the financial system – speech by Sarah Breeden

15 April 2019

In this speech Sarah Breeden, Executive Director, International Banks Supervision, sets out how the financial risks from climate change are far-reaching, foreseeable and for action today. She notes that to avoid the impending storm, the financial system needs to plot a new course to safer waters. And she sets out how the Bank of England is supporting that, including through the PRA’s publication on Monday 15 April of its supervisory expectations for managing these risks, see the cross-cutting section for more information.

An annuity is a very serious business: Part two – speech by David Rule

10 April 2019

In this speech David Rule highlights the continuing trend in the transfer of defined benefit pension liabilities from employers to insurers and sets out some of the key risks facing annuity writers. David explains how the PRA’s implementation of Solvency II achieves a balance of protecting policyholders and facilitating long-term investment in the economy.

Cross cutting publications and updates

PS5/19 ‘The Bank of England’s amendments to financial services legislation under the European Union (Withdrawal) Act 2018’

18 April 2019

The Bank of England (Bank) and PRA have published PS5/19 ‘The Bank of England’s amendments to financial services legislation under the European Union (Withdrawal) Act 2018’ – April 2019, which includes final versions of policy materials including EU Exit Instruments, Supervisory Statements (SSs), and a Statement of Policy, which were published as near final on 28 February 2019. Of particular interest to those working with or at PRA-regulated firms are:

For further information and materials about the PRA’s work on the UK’s withdrawal from the EU, please see the dedicated EU withdrawal pages.

CP9/19 ‘Regulated fees and levies: Rates for 2019/20

15 April 2019

Consultation Paper (CP) 9/19 sets out proposals for the PRA’s fees 2019/20. The proposals would make amendments to the Fees Part of the PRA Rulebook (Appendix 1), and Supervisory Statement (SS) 3/16 ‘Fees: PRA approach and application’ (Appendix 2).

This consultation is relevant to all firms that currently pay PRA fees or are expecting to do so within the 2019/20 fee year (1 March 2019 to 29 February 2020).

This consultation closes on Tuesday 14 May 2019.

The proposed implementation date for the proposals contained in this consultation is Monday 1 July 2019.


Three publications on the PRA’s enforcement policy and regulatory investigation processes

15 April 2019

The PRA issued three publications relating to the PRA’s enforcement policy and regulatory investigations processes:

  • In CP10/19 ‘Enforcement: Changes to the PRA’s settlement policy’, the PRA sets out proposals to amend its policy on the settlement of enforcement action. This is by way of proposed amendments to Statement of Policy ‘The Prudential Regulation Authority’s approach to enforcement: statutory statements of policy and procedure’ (‘the PRA’s Enforcement Statement of Policy’).

    This CP may be relevant to PRA-authorised persons, qualifying parent undertakings, persons who are or have been auditors or actuaries of a PRA-authorised person, senior managers and certified employees at firms, and all individuals involved in providing financial services at PRA-authorised persons. It will also be of particular interest to professional advisers who represent firms and individuals subject to PRA enforcement action.

    This consultation closes on Monday 15 July 2019.

    Please note: The PRA will be hosting a roundtable for law firms on Tuesday 11 June 2019. It will primarily be of interest to law firms that represent subjects under investigation, or who work on PRA regulatory matters more generally. If you would like to register your interest in attending, see CP10/19 page for details.

  • Regulatory Investigation processes:

    ‘PRA investigation referral criteria’, and ‘Regulatory investigations guide’ are available on the PRA’s statutory powers page.

PS11/19 ‘Enhancing banks’ and insurers’ approaches to managing the financial risks from climate change’

15 April 2019

This PRA PS provides feedback to responses to CP23/18 ‘Enhancing banks’ and insurers’ approaches to managing the financial risks from climate change’. It also contains the final SS3/19 ‘Enhancing banks’ and insurers’ approaches to managing the financial risks from climate change’.

This PS is relevant to all UK insurance and reinsurance firms and groups, ie those within the scope of Solvency II including the Society of Lloyd’s and managing agents (‘Solvency II firms’) and non-Solvency II firms, (collectively referred to as ‘insurers’), banks, building societies, and PRA-designated investment firms (collectively referred to as ‘banks’). ‘Firms’ will be used to refer to both insurers and banks.

The expectations in SS3/19 take effect on publication of this PS.

Banking publications and updates

PRA109 ‘Operational continuity’ 

30 April 2019

In PS10/17, ‘Ensuring operational continuity in resolution: reporting requirements’ the PRA committed to confirming the precise mechanism by which the PRA109 ‘Operational continuity’ data would be collected. The PRA confirm that this data will be collected via Excel. For the Excel template and related instructions please see ‘PRA data items and instructions’.

Letter from Victoria Saporta: Written auditor reporting – update and main thematic findings

18 April 2019

Letter to Chief Financial Officers of selected deposit-takers.


CP8/19 ‘Supervising international banks: Revision of the Branch Return’

8 April 2019

In this CP, the PRA sets out its proposals for changes to the format and content of the Branch Return Form, and additional guidance to assist firms in completing it.

This CP is relevant to all existing and prospective PRA-supervised branches of deposit-takers and designated investment firms which are not UK headquartered firms (‘international banks’).

This consultation closes on Sunday 7 July 2019.

Reminder of 1 July 2019 PRA110 implementation

1 April 2019

Firms are reminded that PRA110 reporting and the commencement of the dual reporting period with FSA047 and FSA048 will take effect on Monday 1 July 2019. Firms are encouraged to check the Regulatory reporting – banking sector page for updates on PRA110 reporting, and to continue to familiarise themselves with the policy, template and instructions, and Q&As, to prepare for implementation.

Reminder: Firm feedback survey

20 March 2019

The PRA seeks input from firms on the effectiveness and quality of our supervisory framework and approach. One of the ways we do this is through the annual firm feedback survey. The survey gives PRA-authorised firms the opportunity to comment on a number of topics.

Each year a sample of the small and medium-sized firms are also invited to complete the survey and a selection of these are invited to participate in a roundtable follow-up meeting. The smaller firms being surveyed in 2019 can expect to receive a notification on Wednesday 8 May 2019.

For more information visit the ‘firm feedback survey’ section on the supervision page.

Insurance publications and updates

Insurance Stress Test 2019: Request for technical input

15 April 2019

The PRA will be conducting an insurance stress test for the largest regulated life and general insurers from July to September 2019.

The PRA is seeking feedback on any aspects of this exercise from firms and other industry participants by Friday 31 May 2019. Please send any comments to IST2019@bankofengland.co.uk. If you are a firm, please include your name and FRN in the subject of the email.

Following consideration of the technical input, the PRA intends to issue a formal announcement to request firms’ participation on Monday 1 July 2019 to complete this exercise by Monday 30 September 2019.


CP7/19 ‘Solvency II: Equity release mortgages – Part 2’

3 April 2019

The PRA published CP7/19 ‘Solvency II: Equity release mortgages – Part 2’ together with a letter from David Rule, Executive Director of Insurance Supervision.

In this CP, the PRA proposes amendments to its expectations in respect of firms investing in equity release mortgage (ERM) portfolios, as set out in Chapter 3 of SS3/17 ‘Solvency II: Matching adjustment – illiquid unrated assets and equity release mortgages’.

This CP is relevant to insurance and reinsurance companies holding ERMs.

This consultation closes on Wednesday 3 July 2019. The proposed implementation date for the proposals in this CP is Tuesday 31 December 2019.


Updates to National Specific Templates and Bank of England Insurance XBRL taxonomy v1.0.0

1 April 2019

The PRA issued the following two updates relevant to Solvency II insurers:

  1. National Specific Templates – the PRA published a document to address inconsistencies in the NS.07 template, and assist firms in its submission for year-end 2018, on the Regulatory reporting – insurance sector page.
  2. Bank of England Insurance XBRL taxonomy v1.0.0 – the PRA released a hotfix for the Bank of England Insurance data point model (DPM) and XBRL taxonomy v1.0.0, and technical artefacts to address inconsistencies identified. The PRA also published an updated Solvency II XBRL filing manual to update sections that reference the Bank of England insurance XBRL filings.

Also in the month

17 April

‘Bank of England to disclose assessment of how it manages climate-related financial risk in the 2019/20 annual report’

 The PRA published a news release, and an open letter on climate-related financial risks from Mark Carney, Governor of the Bank of England, Francois Villeroy de Galhau, Governor of the Banque de France, and Frank Elderson, Chair of the Network for Greening the Financial System (NGFS). This follows publication of the NGFS’s first comprehensive report ‘A call for action – climate change as a source of financial risk’, also published Wednesday 17 April. See the Climate change page for more information.

8 April

Bank Underground

Bank Underground is a blog for Bank of England staff to share views that challenge – or support – prevailing policy orthodoxies. The views expressed here are those of the authors, and are not necessarily those of the Bank of England or its policy committees.

Bank Overground

The purpose of Bank Overground is to share our internal analysis. Each bite-sized post summarises a piece of analysis that supported a policy or operational decision.

KnowledgeBank

From interest rates and inflation through to bank failures and financial crises, KnowledgeBank uses everyday examples and engaging visuals to bring economics to life.

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