PRA Regulatory Digest - December 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 02 January 2020

Top news and publications

The Bank of England, PRA and Financial Conduct Authority (FCA) published:

  • building operational resilience: impact tolerances for important business services – Press release
  • a joint foreword and summary of ‘Building operational resilience: Impact tolerances for important business services’
  • three Bank of England consultation papers relevant to financial market infrastructures
  • PRA Consultation Papers 29/19 ‘Operational resilience: Impact tolerances for important business services
  • the PRA also published CP30/19 ‘Outsourcing and third party risk management’

The PRA published a letter from Sam Woods ‘The prudential regulatory framework and Libor transition’

News and speeches

PRA announces special requirements regarding whistleblowing systems and controls at the Society of Lloyd’s’

23 December 2019

The PRA published ‘PRA announces special requirements regarding whistleblowing systems and controls at the Society of Lloyd’s’.

‘Building operational resilience: Impact tolerances for important business services’

5 December 2019

The Bank of England (the Bank), PRA and Financial Conduct Authority (FCA) published a shared policy summary and co-ordinated consultation papers (CPs) on new requirements to strengthen operational resilience in the financial services sector. 

To complement the policy proposals on operational resilience, the PRA has published a CP on ‘Outsourcing and third-party risk management’.

See ‘Cross cutting publications and updates’ for more information.

Cross cutting publications and updates

New Chair of the PRA Practitioner Panel

2 January 2020

HM Treasury has approved the appointment of Helen Pickford (Chief Financial Officer, Zurich UK) as the new Chair of the PRA Practitioner Panel, replacing Martin Gilbert (Chief Executive, Standard Life Aberdeen). Additionally, Victoria Stubbs (Chief Risk Officer, The Cambridge Building Society) has been appointment as the new Deputy Chair of the PRA Practitioner Panel, replacing Ashraf Piranie (Group Finance and Operations Director, West Bromwich Building Society). Both appointments took effect on Saturday 30 November 2019.

Firm feedback survey results 2018

20 December 2019

The annual firm feedback survey gives PRA-authorised firms the opportunity to comment on their experienced of being supervised. For more information about the firm feedback survey, visit the Supervision webpage.

Discussion Paper: The 2021 biennial exploratory scenario on the financial risks from climate change

18 December 2019

The Bank has published a discussion paper setting out the proposal for the 2021 Biennial Exploratory Scenario (BES) on climate-related risks. The objective is to test the resilience of the largest banks, insurers and the financial system to different possible climate pathways and provide a comprehensive assessment of the UK financial system’s exposure to climate-related risks. The response period closes on 18 March 2020.

On 18 December 2019 the Bank published the minutes for the third meeting of the PRA and FCA joint Climate Financial Risk Forum.

CP29/19 ‘Operational Resilience: Impact tolerances for important business services’

5 December 2019

This paper is issued jointly by the PRA, the FCA and the Bank in its capacity of supervising financial market infrastructures (FMIs), collectively ‘the supervisory authorities’.

The Discussion Paper ‘Building the UK Financial Sector’s Operational Resilience’ (the DP), published in July 2018, set out an approach to operational resilience.

On Thursday 5 December 2019, the supervisory authorities published a suite of documents, which would embed that approach into policy. This paper provides a summary of the overall approach and development since the DP.In CP29/19, the PRA sets out its proposals for PRA rules, a supervisory statement (SS) and a statement of policy (SoP) designed to improve the operational resilience of firms and protect the wider financial sector and UK economy from the impact of operational disruptions.

CP29/19 is relevant to all:

  • UK banks, building societies and PRA-designated investment firms; and
  • UK Solvency II firms, the Society of Lloyd’s and its managing agents.

This consultation closes on Friday 3 April 2020.

CP30/19 ‘Outsourcing and third party risk management’

5 December 2019

In this CP, the PRA sets out and invites comments on its proposals for modernising the regulatory framework on outsourcing and third-party risk management. These proposals are set out in the draft SS on ‘Outsourcing and third-party risk management’ in the Appendix to this CP.

This CP is relevant to all UK banks, building societies and PRA-designated investment firms, insurance and reinsurance firms and groups in scope of Solvency II, including the Society of Lloyd’s and managing agents, and branches of overseas banks and insurers.

This consultation closes on Friday 3 April 2020.

Further information

Banking publications and updates

PS27/19 ‘Responses to Occasional Consultation Paper 25/19 – Chapter 4: Reporting updates for Capital+ and ring-fenced bodies’

19 December 2019

This Policy Statement (PS) provides the PRA’s final rules amending the Regulatory Reporting Part of the PRA Rulebook and reporting templates PRA101, PRA102, RFB003, RFB004 and RFB008, following Chapter 4 of CP25/19 ‘Occasional Consultation Paper – October 2019’. The PRA received no responses to the consultation and will be making the policy as proposed in the CP.

The PRA will also be updating links to the templates in the appendices to SS34/15 ‘Guidelines for completing regulatory reports’.

This PS is relevant to UK banks, building societies and PRA-designated investment firms.

The final SS attached to this PS should be read in conjunction with SS1/19 ‘Non-binding PRA materials: The PRA’s approach after the UK’s withdrawal from the EU’

The prudential regulatory framework and Libor transition

18 December 2019

The PRA published a letter from Sam Woods, Deputy Governor for Prudential Regulation and Chief Executive Officer of the PRA, to the Chair of the Working Group on Sterling Risk-Free Reference Rates on ‘The prudential regulatory framework and Libor transition’.

The PRA’s review of firms’ Systemic risk buffer (SRB) rates

17 December 2019

The PRA has reviewed firms’ SRB rates in line with its commitment in ‘The PRA’s approach to the implementation of the Systemic Risk Buffer’ and has decided to keep firms’ SRB rates unchanged. This means the rates published below on Wednesday 1 May 2019 still apply.

PS26/19 ‘Pillar 2 liquidity: PRA110 reporting frequency threshold’

17 December 2019

This PS provides feedback to responses to CP14/19 ‘Pillar 2 liquidity: PRA110 reporting frequency threshold’. It contains the PRA’s final policy, as follows:

  • amendments to the Reporting Part of the PRA Rulebook; and
  • updated SS24/15 ‘The PRA’s approach to supervising liquidity and funding risks’.

This PS is relevant to PRA-authorised UK banks, building societies, and PRA-designated UK investment firms, referred to collectively as ‘firms’ with total assets of £5 billion or above, calculated in accordance with Council Directive 86/635/EEC.

Further information

For information on banking regulatory returns and how to report them, visit the Regulatory reporting – banking sector page.

For details of forms used to collect data through the online statistical data application (OSCA), visit the Forms, definitions, and validation page.

Insurance publications and updates

Update to Solvency II XBRL filing manual

9 December 2019

The Bank of England has updated the Solvency II XBRL filing manual to help firms and software vendors create XBRL instance documents for Solvency II Pillar 3 and Bank of England Insurance reporting. Visit the Regulatory Reporting – Insurance sector webpage for the updated filing manual.

Further information

For information on insurance regulatory returns and how to report them, visit the Regulatory reporting – insurance sector page.

Your inputs and views on open PRA consultations and other requests closing in January 2020

Closing date: 13 January

Closing date: 17 January

Closing date: 24 January

Also in the month

17 December 2019

10 December 2019

More information

Bank Underground - 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.

European and international developments - readers are also referred to the following websites:

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