Top news and publications
- Solvency UK: Maintaining the momentum - speech by Gareth Truran
- Competitiveness and growth: continuing the conversation − speech by Victoria Saporta
- Timings of Basel 3.1 implementation in the UK
- CP18/23 – Diversity and inclusion in PRA-regulated firms
- CP19/23 – Review of Solvency II: Reform of the Matching Adjustment
- CP20/23 – Ring-fenced bodies: managing risks from third-country subsidiaries and branches
- Letter from Victoria Saporta ‘Thematic feedback from the 2022/2023 round of written auditor reporting’
News and speeches
Solvency UK: Maintaining the momentum – speech by Gareth Truran
20 September 2023
In his speech, Gareth discussed the progress the PRA has made on consulting on its package of reforms to Solvency II, and previewing the key topics to be covered in a forthcoming consultation on changes to the matching adjustment. Gareth also talked about some of the PRA’s longer-term insurance priorities, including the plans for enhanced stress testing, deeper research on the impact of insurance regulation on the real economy, and how the domestic insurance reforms dovetail with international developments.
Competitiveness and growth: continuing the conversation − speech by Victoria Saporta
19 September 2023
Given at the conference on the role of financial regulation in international competitiveness and economic growth held at Bank of England, Vicky Saporta talks about how the PRA can advance its new competitiveness and growth objective.
Timings of Basel 3.1 implementation in the UK
27 September 2023
In November 2022, the Prudential Regulation Authority (PRA) published consultation paper (CP) 16/22 – Implementation of the Basel 3.1 standards, setting out proposals for PRA rules covering the remaining elements of the Basel III standards that are yet to be implemented in the UK. The consultation period ended on 31 March 2023. Since then, we have been considering the feedback we have received.
To support firms in their planning processes, we are today announcing two updates on our intended timetable to complete our work and implement the Basel 3.1 standards in the UK.
Letter from Victoria Saporta ‘Thematic feedback from the 2022/2023 round of written auditor reporting’
29 September 2023
The PRA published a letter to chief financial officers of selected PRA-regulated deposit-takers which provides thematic feedback from the PRA’s review of written auditor reports received in 2023 covering accounting for expected credit losses, climate risk and fair value. The letter has been developed with the size, nature, and complexity of firms in scope of written auditor reporting in mind. However, we think the findings will be helpful for all firms applying IFRS.
PRA statement on the evaluation of the written auditor reporting policy
29 September 2023
We published a statement on the evaluation of the written auditor reporting policy. The statement sets out the conclusions of the evaluation of the written auditor policy which assessed how the policy is delivering against its objectives. It also sets out how the PRA intends to continue to refine its approach to the policy c to make it a more efficient and effective supervisory tool.
Cross cutting publications and updates
CP18/23 – Diversity and inclusion in PRA-regulated firms
25 September 2023
This CP sets out the PRA’s proposed rules and expectations aimed at improving diversity and inclusion in PRA-regulated firms, which can support better firm governance and decision-making, thereby advancing the PRA’s objectives. The proposals in this CP have been developed in parallel with the Financial Conduct Authority (FCA), who are also publishing a CP on the same topic, alongside this CP, in relation to FCA-regulated firms.
The proposals in this CP build on the ideas discussed in the regulators’ joint discussion paper (DP)2/21 – Diversity and inclusion in the financial sector – working together to drive change, which was published by the PRA, the FCA, and the Bank of England (the Bank) in July 2021. Responses to DP2/21 were supportive of the regulators having a role to play in helping to improve diversity and inclusion in the financial sector, as explained in the Background section below. The proposals in this CP have been informed by many of the suggestions made by respondents to the DP. As there is no single means of improving diversity and inclusion, the PRA considers that firms need to take a holistic approach. This is reflected in the proposals in this CP, which recognise that developing and maintaining a diverse and inclusive culture requires organisation-wide commitment.
Insurance publications and updates
PS12/23 – Dealing with insurers in financial difficulties
14 September 2023
This PS provides feedback to responses to CP 3/23 – Dealing with insurers in financial difficulties. It also contains the PRA’s final policy, as follows:
- amendments to the Policyholder Protection Part of the PRA Rulebook (PPP) (Appendix 1)
- updated Policyholder protection statement of policy (April 2015) (FSCS SoP) (Appendix 2)
- new Insurers in Financial Difficulties: Notification of Affected Persons Part of the PRA Rulebook (PRA rules) (Appendix 3)
- new Dealing with insurers in financial difficulties statement of policy (PRA SoP) (Appendix 4)
The PRA received three responses to this consultation.
CP19/23 – Review of Solvency II: Reform of the Matching Adjustment
28 September 2023
This CP sets out the PRA’s proposed reforms that will enable broader and quicker investment by insurers in their matching adjustment (MA) portfolios, while improving responsiveness to risk and enhancing firms’ responsibility for risk management. The PRA considers that by adapting the MA rules for the features of insurance business in the UK and the financing demands of the wider economy, the proposals will allow the life insurance sector to play a bigger role in productive investment in the UK economy, while continuing to offer their policyholders the level of security determined by legislation.
This CP should be read in conjunction with CP12/23 – Review of Solvency II: Adapting to the UK insurance market, published on Thursday 29 June 2023. In particular, CP12/23 sets out details of the PRA’s overall consultation plans for reforms to Solvency II, the background to the Solvency II Review and the structure of the reformed regime.
Banking publications and updates
CP20/23 – Ring-fenced bodies: managing risks from third-country subsidiaries and branches
28 September 2023
This CP sets out the PRA’s proposed rule and policy updates in respect of the establishment and maintenance of third-country branches and subsidiaries within ring-fenced body (RFB) sub-consolidation groups.
HM Treasury (HMT) is currently consulting on legislative changes that, amongst other things, would allow RFBs to establish entities in third countries. This would allow RFBs to compete with international and domestic banking groups, advancing the PRA’s secondary objectives of competition, and competitiveness and growth. The proposals discussed in this CP ensure that this benefit can be realised in a manner that supports the PRA’s primary objective of promoting the safety and soundness of the firms it regulates.
CP17/23 – Capitalisation of foreign exchange positions for market risk
27 September 2023
This CP sets out the PRA’s proposed clarifications and amendments when capitalising foreign exchange exposures under the market risk capital framework. It also sets out the process for seeking permission to exclude Structural Foreign Exchange (SFX) positions from this capital calculation. The PRA has proposed in CP16/22 – Implementation of the Basel 3.1 standards that the existing regulation from the onshored Capital Requirements Regulation (CRR) Article 352 will be moved with amendments to Article 325 in the proposed Market Risk: General Provisions (CRR) Part of the PRA Rulebook.
The proposals in this CP relate to the post-Basel 3.1 PRA proposed implementation described in CP16/22, and would result in changes to:
- the proposed Article 325 (Approaches for Calculating the Own Funds Requirements for Market Risk) in the proposed Market Risk: General Provisions (CRR) Part of the PRA Rulebook (Appendix 1);
- the proposed supervisory statement (SS) 13/13 – Market Risk from CP16/22 (Appendix 2);and
- the CRR Permission 352(2) supplementary application form (Appendix 3).
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 piece of analysis that support a policy or operational decision.
European and International developments – readers are referred to the following websites: