PRA Regulatory Digest - March 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 April 2019

Top news and publications

  • The PRA published a news release in response to HM Treasury publishing the ‘Independent Review of the Prudential Supervision of the Co-operative Bank Plc (2008-2013)’
  • The PRA published a news release on the first meeting of the PRA and FCA’s joint Climate Financial Risk Forum
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News and speeches

Independent Review of the Prudential Supervision of the Co-operative Bank Plc (2008-2013)

27 March 2019

The PRA published a news release in response to HM Treasury publishing the ‘Independent Review of the Prudential Supervision of the Co-operative Bank Plc (2008 – 2013)’, which includes eight recommendations addressed to both the PRA and the Bank. Alongside the news release the PRA published ‘The PRA and Bank's response to the Independent Review of the Co-operative Bank’ which sets out the PRA’s initial response to the recommendations.

PRA and FCA agree Memorandum of Understanding (MoUs) with EBA

20 March 2019

The PRA published a news release announcing they had agreed a template of Memorandum of Understanding (MoU) with the Financial Conduct Authority (FCA), and the European Banking Authority (EBA).

First meeting of the PRA and FCA’s joint Climate Financial Risk Forum

12 March 2019

The PRA published a news release on the first meeting of the PRA and FCA’s joint Climate Financial Risk Forum. For more information see the Climate Change webpage.

Bank of England and Financial Conduct Authority agree Memoranda of Understanding (MoUs) with EIOPA and EU insurance supervisors

5 March 2019

The PRA published a news release stating the PRA, FCA, and European Insurance and Occupational Pensions Authority (EIOPA) announced that they have agreed Memoranda of Understanding (MoUs) regarding supervisory cooperation and information-sharing arrangements with respect to UK and EU/EEA insurance companies.

Cross-cutting publications and updates

PS10/19 ‘Financial Services Compensation Scheme – Management Expenses Levy Limit 2019/20’

29 March 2019

This PRA Policy Statement (PS) follows Consultation Paper (CP) 2/19 ‘Financial Services Compensation Scheme – Management Expenses Levy Limit 2019/20’ and sets out the final rules for the Financial Services Compensation Scheme (FSCS) Management Expenses Levy Limit (MELL) for 2019/2020.

This PS is relevant to all PRA-authorised firms, but contains no material of direct relevance to retail financial services consumers or consumer groups upon which they might need to act.

The FCA Board has also made its respective rule for the 2019/20 MELL.

Temporary permission regime (TPR)

26 March 2019

The PRA has set out its intention to extend the notification period for the TPR, please see the TPR webpage for more information.

22 March 2019

The supplementary PRA Direction: Temporary permission and variation: notification before exit day published on the Temporary permissions regime (TPR) webpage clarifies the position where a firm that has submitted a notification to enter the TPR wants to withdraw its notification before exit day.

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 webpage.

PS6/19 ‘Responses to Chapters 3-7 of CP24/18 ‘Occasional Consultation Paper’’

5 March 2019

PS6/19 provides feedback on responses to Chapters 3 to 7 of CP24/18 ‘Occasional Consultation Paper’. This PS is relevant to all PRA-authorised firms.

The appendices to this PS provide links to the final rules amending Parts of the PRA Rulebook, final Supervisory Statements (SS) and final Statements of Policy (SoPs), as set out in the table on the PS6/19 webpage.

Banking publications and updates

26 March 2019

The structure of the Regulatory reporting – banking sector section of the website was updated to aid usability, specifically, there are now separate pages for information on banks, building societies and investment firms and credit unions.

CP6/19 ‘Pillar 2 liquidity: Updates to the framework’

19 March 2019

In this CP, the PRA sets out proposals for regulatory reporting amendments and clarifications to the Pillar 2 liquidity framework. The proposed changes would be implemented through amendments to:

This CP is relevant to UK banks, building societies, PRA-designated investment firms, and non-EU EEA banks.

This consultation closes on Friday 19 April 2019.

The PRA also published version 4 of the PRA110 Q&As. For more information see the Reporting of PRA110 section on the Regulatory reporting – banking sector webpage.

CP5/19 ‘Pillar 2 capital: Updates to the framework’

13 March 2019

In this CP, the PRA proposes to update the Pillar 2 capital framework to reflect continued refinements and developments in setting the PRA buffer (also referred to as Pillar 2B).

The PRA also proposes to clarify its approach to assessing weaknesses in risk management and governance, explain the process for updating the benchmarks used to calculate the Pillar 2A requirement for credit risk and correct some minor drafting errors that have been identified in previous publications.

This CP is relevant to PRA-authorised banks, building societies and PRA-designated investment firms. This CP is not relevant to credit unions, insurance and reinsurance firms.

This consultation closes on Thursday 13 June 2019.

PS8/19 ‘Credit risk mitigation: Eligibility of guarantees as unfunded credit protection

13 March 2019

This PS provides feedback to responses to CP6/18 ‘Credit risk mitigation: Eligibility of guarantees as unfunded credit protection’. It also contains the PRA’s final policy in updated:

This PS is relevant to all firms bound by the Capital Requirements Regulation (575/2013) (CRR).

PS7/19 ‘Credit risk: The definition of default’

6 March 2019

This PS provides feedback to responses to CP17/18 ‘Credit risk: definition of default’. It also contains the PRA’s final policy, as follows:

  • an amendment to the Credit Risk Part of the PRA Rulebook to set thresholds for determining whether a credit obligation is material for the purpose of the Capital Requirements Regulation’s (575/2013) (CRR’s) definition of default (Appendix 1); and
  • an update to the PRA’s expectations in SS11/13 ‘Internal Ratings Based (IRB) approaches’ to implement the EBA’s regulatory products that relate to the definition of default (Appendix 2).

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

Reminder of 1 July 2019 PRA110 implementation

1 March 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.

Insurance publications and updates

PS9/19 ‘Solvency II: Group own fund availability’

14 March 2019

This PS provides feedback on the responses to CP15/18 ‘Solvency II: Group own fund availability’. This PS is relevant to all UK insurance firms within the scope of the Solvency II Directive (‘the Directive’) and to the Society of Lloyd’s.

SS9/15 ‘Solvency II: Group supervision’ (see Appendix) sets out the PRA’s updated expectations for group supervision, and incorporates the PRA’s expectations for assessments of the availability of own funds to cover the group Solvency Capital Requirement (SCR) as set out in CP15/18.

The PRA published an update on the EU withdrawal webpage aimed at firms looking to use the Part VII of the Financial Services and Markets Act (FSMA) insurance business transfers: Saving Provisions available in the Financial Services (Miscellaneous) (Amendment) (EU Exit) Regulations 2019. Any insurers with EEA business contemplating undertaking a Part VII and whose transfer is not already underway, should make immediate contact with their PRA supervisory contact, or email the PRA Part VII Transfers team at Portfolio.Transfers@bankofengland.co.uk.

CP4/19 ‘Liquidity risk management for insurers’

5 March 2019

In this CP the PRA seeks views on a draft SS ‘Liquidity risk management for insurers’ and the consequential supersession of a legacy supervisory statement on collateral upgrade transactions.

The proposals are relevant to all UK Solvency II firms, including in respect of the Solvency II groups provisions, the Society of Lloyd’s and its managing agents, and non-Directive insurers.

This consultation closes on Wednesday 5 June 2019.

Also in the month

22 March 2019

21 March 2019

11 March 2019

6 March 2019

1 March 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

This month Bank Overground includes a guide on ‘What are the business models of new fintech firms in the UK?’.

The purpose of Bank Overground is to share the PRA’s 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 05 April 2019
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