PRA Regulatory Digest - June 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 July 2019

Top news and publications

News and speeches

‘Bank regulation: On the benefits of flexibility’ – speech by Vicky Saporta

26 June 2019

In her speech, Vicky Saporta explains why the PRA has to be robust but flexible when responding to the future challenges. Technology is transforming the financial system she says. And UK regulators must have the powers and tools to respond flexibly to the opportunities and risks it brings. Vicky also outlines the PRA’s approach to liquidity policy now the international banking reforms are in place. She set out three priority issues for implementation: cashflow mismatch risk, the Net Stable Funding Ratio (NSFR) and asset encumbrance.

‘Making impactful change’ – speech by Anna Sweeney

19 June 2019

In her speech, Anna Sweeney talks about the initiatives we’ve designed to encourage greater diversity in our workforce.

‘Operational resilience in financial services: time to act’ report launch – speech by Lyndon Nelson

5 June 2019

In his speech, Lyndon Nelson welcomes a joint report by CityUK and PWC on operational resilience in the UK financial sector. The report has recommendations for both the industry and regulators. Lyndon highlights the importance of strong collaboration when it comes to building resilience in the financial sector.

‘Managing machines: the governance of artificial intelligence’ – speech by James Proudman

4 June 2019

UK financial firms have started to integrate artificial intelligence and machine learning into their operations. But, they must also understand the implications for governance in order to identify and manage the associated risks. In his speech, James gives three principles firms can use when they’re thinking about how to do this.

FCA and PRA jointly fine Raphaels Bank £1.89 million for outsourcing failings

30 May 2019

The Financial Conduct Authority (FCA) and PRA have fined R. Raphael & Sons plc (‘Raphaels’) for failing to manage its outsourcing arrangements properly between April 2014 and December 2016.

Cross cutting publications and updates

PS12/19 ‘Regulated fees and levies: Rates proposals 2019/20’

13 June 2019

This PRA Policy Statement (PS) provides feedback to responses to Consultation Paper (CP) 9/19 ‘Regulated fees and levies: Rates proposals 2019/20’ (page 2 of 2), and sets out the PRA’s final policy.

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

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

PS5/19 ‘The Bank of England’s amendments to financial services legislation under the European Union (Withdrawal) Act 2018’ was updated to add Appendix B.2A which makes a small amendment to the PRA Rulebook: (EU Exit) Instrument 2019 in Appendix B.2. This updates the date on which new liquidity reporting rules are commenced, to take account of the extension of the Article 50 negotiating period and consequent change in exit day.

Contacting the PRA – update

If you’re from a regulated firm, please use the below for any enquiry except those relating to the BEEDS portal:

  • PRA.FirmEnquiries@bankofengland.co.uk (we are available on email from 9am - 5pm)
  • 020 3461 7000 - Monday to Friday: 10am - 12noon (have your six digit firm reference number (FRN xxxxxx) ready)
  • Firm Enquiries Team (MG1-SE), Prudential Regulation Authority, 20 Moorgate, London, EC2R 6DA

If your query is about the Bank of England Electronic Data Submission (BEEDS) portal please contact:

CP13/19 ‘ Occasional Consultation Paper’

7 June 2019

This CP proposes minor amendments to PRA Rulebook Parts, supervisory statements (SSs), and the relevant templates and LOG files.

The chapters in this CP are relevant to different firms, as follows:

  • Chapter 2 – all UK insurance firms within the scope of Solvency II, the Society of Lloyd’s, and firms that are part of a Solvency II group that will determine and classify capital instruments under the Solvency II own funds regime, together with their advisors;
  • Chapter 3 – all insurance firms, insurance holding companies, and the Society of Lloyd’s;
  • Chapter 4 – UK banks and UK designated investment firms with Capital Requirements Regulation, Internal Model Approach permissions; and
  • Chapter 5 – all Solvency II firms, including the Society of Lloyd’s. 

The consultation closes on Wednesday 7 August 2019.

During the consultation period, the PRA will be issuing a Public Working Draft (PWD) of the taxonomy update to support collection of the proposed changes to National Specific Templates, internal model output, market risk sensitivities and standard formula reporting. The PWD will include the interaction of these changes with the draft EIOPA Taxonomy 2.4 changes. The PRA plans to give firms no less than three weeks to review the PWD. 

Prudential Regulation Authority Annual Report 2019

6 June 2019

The PRA Annual Report 2019 includes information about its activities for the year ended 28 February 2019, and also contains some of their other reporting obligations.

Readers may also wish to refer to the Bank of England Annual Report and Accounts – 2019 – also published on Thursday 6 June – which contains the Bank’s financial and other disclosures in respect of its activities as the PRA.

As part of the PRA’s commitment to streamline the publication of its reporting obligations, it also published the:

Practitioner Panel and Insurance Sub-committee

6 June 2019

The Practitioner Panel and Insurance Sub-committee Annual Report 2019 was published.

Firms’ preparation for transition from London InterBank Offered Rate (LIBOR) to Risk-free rates (RFRs): Key themes, good practice, and next steps

5 June 2019

The PRA and FCA share key themes and good practice, and set out next steps for the transition from LIBOR.

Last Orders: Calling Time on LIBOR. Speeches and links to material available as discussed at the conference held on 5 June to discuss LIBOR transition to alternative risk-free reference rates.

Banking publications and updates

PS14/19 Pillar 2 liquidity: PRA110 reporting frequency threshold

20 June 2019

In this CP, the PRA sets out its proposal to amend the reporting frequency of the PRA110 reporting template, when a firm is in stress.

The proposals in this CP would make amendments to:

  • the Regulatory Reporting Part of the PRA Rulebook (Appendix 1 and Appendix 2); and
  • Supervisory Statement (SS) 24/15 ‘The PRA’s approach to liquidity and funding risk’ (Appendix 3). 

This CP 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.

This consultation closes on Friday 27 September 2019.

Letter from Melanie Beaman: ‘Review and findings: Fast growing firms’

19 June 2019

This letter to CEOs from Melanie Beaman (Director, UK Deposit-takers Supervision) communicates the PRA’s wider overall findings from its review, and highlights in bold the aspects of risk management and control that the PRA considers all firms should be adopting.

PS13/19 ‘Pillar 2 liquidity: Updates to the framework’

17 June 2019

This PRA PS provides feedback to responses to CP6/19 ‘Pillar 2 liquidity: Updates to the framework’. It also contains the PRA’s final policy with updates to:

This PS is relevant to UK banks, building societies, PRA-designated investment firms, and non-EU EEA banks, referred to collectively as ‘firms’ in this PS.

Insurance publications and updates

Letter from Sid Malik: Observations from recent regulatory reviews

19 June 2019

This letter to Chief Actuaries of life insurers is part of the ongoing dialogue between the PRA and the UK insurance sector. The purpose of this letter is to share observations from the PRA’s regulatory activities in the past 12 months which are specifically relevant to Chief Actuaries of life insurers, and to signpost other important PRA initiatives that these Chief Actuaries should be aware of.

Insurance Stress Test 2019

18 June 2019

Following the request for technical input in a letter to firms on Thursday 11 April 2019, the PRA has launched its biennial insurance stress test and is asking the largest regulated life and general insurers to provide information about the impact of a range of stress tests on their business. For general insurers, the PRA is coordinating some of the scenarios with the Bermuda Monetary Authority.

The deadline for submission is as follows:

  • Sections A and B: 5pm, Monday 30 September 2019
  • Section C: 5pm, Thursday 31 October 2019

Questions about the Insurance Stress Test can be sent to IST2019@bankofengland.co.uk.

Your inputs and views on open PRA consultations and other requests closing - July 2019

Closing date: 3 July 2019 Closing date: 7 July 2019 Closing date: 15 July 2019

Also in the month

20 June 2019

Mark Carney, Governor of the Bank of England gave a speech ‘Enable, empower, ensure: a new finance for the new economy’ at the Mansion House Bankers’ and Merchants’ Dinner, London. In his speech, the Governor outlined the findings of Huw van Steenis’ report into the future of finance and set out how the Bank will respond to this.

14 June 2019

13 June 2019

6 June 2019

5 June 2019

5 June 2019

These items are selected from Latest Bank of England news. Readers may also find it useful to refer to the Statistics and Research sections of the Bank’s website.

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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This page was last updated 28 June 2019
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