PRA Regulatory Digest - June 2022

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 2022

Top news and publications

  • CP6/22 – Model risk management principles for banks
  • PRA statement on removing the PRA buffer adjustment in PS15/20
  • PS5/22 – Regulated fees and levies: Rates for 2022/23
  • Prudential Regulation Authority Annual Report 2022
  • Letter to firms ‘Fundamental Review of the Trading Book (FRTB): Timetable for submission of internal model/standard approach pre-applications’

News and speeches

Competitiveness and productive investment: What parts do they play in the reform of insurance regulation? – speech by Charlotte Gerken

14 June 2022

Charlotte Gerken talks about the goals of competitiveness and productive investment, and the impact these are having on the Review of Solvency II. She says that changes to regulations for UK insurers could help to achieve these goals.

Competitiveness and productive investment: What part do they play in the reform of insurance regulation? – speech by Charlotte Gerken

Climate Biennial Exploratory Scenario: Insurance Insights – speech by Stefan Claus

8 June 2022

Stefan Claus talks about how prepared the UK’s largest insurers are for the financial risks caused by climate change. He says the results of recent tests we did show they are getting better at managing these risks. But there is still more to do. The Prudential Regulatory Authority (PRA) and insurers need to work together to bridge gaps in available climate data.

Climate Biennial Exploratory Scenario: Insurance Insights – speech by Stefan Claus

Cross cutting publications and updates

PS5/22 – Regulated fees and levies: Rates for 2022/23

30 June 2022

This PRA Policy Statement (PS) provides feedback to responses to Consultation Paper (CP) 4/22 ‘Regulated fees and levies: Rates proposals 2022/23’. It also contains the PRA’s final policy, as follows:

  • the fee rates to meet the PRA’s 2022/23 Annual Funding Requirement (AFR) for the financial period Tuesday, 1 March 2022 to Tuesday, 28 February 2023 (fee year); and
  • amendments to the Fees Part of the PRA Rulebook (Appendix 1).

This PS is relevant to all firms that currently pay PRA fees or are expecting to do so within the 2022/23 fee year.

PS5/22 – Regulated fees and levies: Rates for 2022/23

Prudential Regulation Authority Annual Report 2022

The PRA published its Annual Report 2022, which includes information about its activities for the year ended 28 February 2022 and also contains:

  • the Annual Competition Report
  • the Ring Fencing Annual Report;
  • the Authorisations Performance Report;
  • the Prescribed Persons (Reports on Disclosures of Information) Regulations 2017 – Annual Report;
  • the Practitioner Panel Annual Report; and
  • the Enforcement Decision Making Committee Report

To find out more, please visit the PRA Annual Report 2022 page.

Changes to FCA Firm Reference Numbers (FRNs) and Product Reference Numbers (PRNs)

23 June 2022

The Financial Conduct Authority (FCA) published a statement on the plan to move to seven-digit FRNs and PRNs for newly registered firms and funds.

A date for the change has not been fixed, and the FCA will provide a further announcement on when it will begin to assign seven-digit FRNs and PRNs.

Changes to FCA Firm Reference Numbers (FRNs) and Product Reference Numbers (PRNs)

Banking publications and updates

Letter from Duncan Mackinnon, David Bailey, and Nathanaël Benjamin – PRA’s review of the use of the SIMM Model: Conclusions’

28 June 2022

The PRA published a letter from Duncan Mackinnon, David Bailey, and Nathanaël Benjamin, to chief risk officers on the use of the Standardised Initial Margin Methodology (SIMM) model by firms in scope of the Mandatory Margining Rules for non-centrally cleared derivatives.

Letter from Duncan Mackinnon, David Bailey, and Nathanaël Benjamin – PRA's review of the use of the SIMM Model: Conclusions'

Letter to firms ‘Fundamental Review of the Trading Book (FRTB): Timetable for submission of internal model/standard approach pre-applications’

27 June 2022

The PRA recently announced that it will consult on the UK implementation of Basel 3.1, including FRTB, in Q4-2022, with a planned implementation date of Wednesday 1 January 2025. The PRA sets out its approach in the letter sent to firms.

Letter to firms ‘Fundamental Review of the Trading Book (FRTB): Timetable for submission of internal model/standard approach pre-applications’

CP6/22 – Model risk management principles for banks

21 June 2022

The PRA has developed a proposed set of principles which it considers to be key in establishing an effective model risk management framework. This CP sets out the PRA’s proposed expectations regarding banks’ management of model risk.

This CP is relevant to all firms in the wider banking sector and their external auditors. Credit unions, insurance, and reinsurance firms would not be in scope of the proposed expectations.

This consultation closes on Friday 21 October 2022.

CP6/22 – Model risk management principles for banks

PRA statement on removing the PRA buffer adjustment in PS15/20

13 June 2022

This statement provides an update on the PRA’s approach to remove the PRA buffer. All firms, currently, with a material PRA buffer adjustment under PS15/20 will no longer have such adjustment from end-December 2022.

This statement is relevant to UK banks, building societies, and PRA-designated investment firms, as well as UK financial holding companies and UK mixed financial holding companies of certain PRA-authorised firms.

PRA statement on removing the PRA buffer adjustment in PS15/20

Your input and views on open PRA consultations and other requests closing in July 2022

DP2/22 – Potential Reforms to Risk Margin and Matching Adjustment within Solvency II

Closing date: 21 July

CP5/22 – The Strong and Simple Framework: a definition of a Simpler-regime Firm

Closing date: 22 July

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-size post summarises a pieces of analysis that support 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 referred to the following websites: