- Policy statement (PS) 1/24 – The Bank of England’s approach to enforcement
- Review of ring-fencing rules
- Letter from Charlotte Gerken and Shoib Khan ‘Insurance Supervision: 2024 priorities’
- Letter from Rebecca Jackson ‘International banks Supervision: 2024 priorities’
- Letter from David Bailey and Laura Wallis ‘UK Deposit Takers Supervision: 2024 priorities’
Cross cutting publications and updates
CP1/24 – Financial Services Compensation Scheme – Management Expenses Levy Limit (MELL) 2024/25
11 January 2024
In this consultation paper (CP), the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) set out the proposals for the Management Expenses Levy Limit (MELL) for the Financial Services Compensation Scheme (FSCS) for 2024/25. The MELL covers the FSCS’s costs of operating the UK’s statutory compensation scheme. This CP is supported by the FSCS’s publication of its Budget Update for 2024/25.
This CP is relevant to all PRA and FCA authorised firms, who fund the FSCS through levies, but contains no material of direct relevance to retail financial services consumers or consumer groups upon which they might need to act. As costs to authorised firms may be passed on to consumers in the form of higher prices, consumers may indirectly contribute to part of the FSCS levies. However, an efficient and adequately funded compensation scheme is beneficial to all consumers as it helps secure an appropriate degree of protection for consumers of financial services firms and promotes the stability of, and confidence in, the UK financial system.
Insurance publications and updates
CP2/24 – Solvent exit planning for insurers
23 January 2024
This CP outlines the PRA’s proposals for PRA-regulated insurers to prepare for an orderly ‘solvent exit’ as part of business-as-usual (BAU) activities and to be able to execute a solvent exit if needed. The PRA identified in 2021, and confirmed in its business plan for 2022/23, that it would do more in the coming years to increase confidence that firms can exit the market with minimal disruption, in an orderly way, and without having to rely on the backstop of an insolvency or resolution process. This CP is part of that long-standing programme of work and follows a similar consultation issued for non-systemic banks and building societies in the UK in CP10/23 – Solvent exit planning for non-systemic banks and building societies.
The proposals in this CP would, if implemented, add a new Preparations for Solvent Exit Part to the PRA Rulebook and introduce a new supervisory statement (SS) (Appendix 2) applicable to those insurers that are in scope of the proposed new rules.
The proposals in this CP include:
- new rules and expectations that firms must prepare for a solvent exit as part of their BAU activities and that firms must document those preparations in a Solvent Exit Analysis (SEA); and
- new expectations, which would apply only if solvent exit became a reasonable prospect for a firm, on how firms should: (a) prepare a detailed Solvent Exit Execution Plan (SEEP), and (b) monitor and manage a solvent exit.
The PRA intends to publish a policy statement (PS) in the second half of 2024. The PRA proposes that the implementation date for the changes resulting from this CP would be Q4 2025.
CP2/24 – Solvent exit planning for insurers
Letter from Charlotte Gerken and Shoib Khan ‘Insurance Supervision: 2024 priorities’
11 January 2024
Letter to Chief Executive Officers of PRA-regulated Insurance firms.
Banking publications and updates
CP3/24 – The PRA’s approach to rule permissions and waivers
31 January 2024
This consultation paper (CP) sets out the Prudential Regulation Authority’s (PRA) proposal for a new statement of policy (SoP) that will set out the PRA’s approach to rule permissions made under section 138BA of the Financial Services and Markets Act (FSMA) 2023.
The PRA’s primary objectives of firm safety and soundness, and policyholder protection would be advanced by setting out the PRA’s approach and expectations in relation to s138BA of FSMA for rule permissions in the proposed SoP. This would provide clarity and transparency on how the PRA will assess applications under s138BA of FSMA, which in turn would lower the cost and increase the speed of s138BA rule permissions.
The PRA’s secondary objectives to facilitate effective competition, and competitiveness and growth would be advanced by making the PRA’s approach clearer and more transparent, making it easier and less costly for firms to do business in the UK.
This CP is relevant to all persons subject to PRA rules.
PS1/24 – The Bank of England’s approach to enforcement
30 January 2024
This Bank of England (Bank) PS provides feedback to responses to CP 9/23 – The Bank of England’s approach to enforcement: proposed changes and clarifications . It also contains the Bank’s final policy, as follows:
- the Bank of England’s approach to enforcement: statements of policy and procedures (the Bank Enforcement Approach) (Appendix 1), incorporating:
- amendments to The Prudential Regulation Authority’s (PRA) approach to enforcement: statutory statements of policy and procedure (PRA Enforcement Approach); and
- a consolidation of new or updated statements of policies and procedures relevant to financial market infrastructures (FMIs) into The Bank’s approach to enforcement in respect of FMIs: statements of policy and procedure (FMI Enforcement Approach);
- amendments to the PRA’s allocation of decision-making and approach to supervisory decisions (the PRA Supervisory Decision-Making Policy) (Appendix 2); and
- amendments to the Enforcement Decision Making Committee (EDMC) Procedures (Appendix 3).
The documents at Appendices 1, 2 and 3 are collectively referred to as the statements of policy.
This PS is relevant to all PRA-authorised banks, building societies, PRA-designated firms, Bank-regulated FMIs, qualifying parent undertakings, insurers, actuaries, auditors, and senior employees of those entities (including, but not limited to, authorised senior management function holders and certified employees under the Senior Managers and Certification Regime (SM&CR)). It is also relevant to credit unions and of interest to professional advisers who represent firms and individuals potentially subject to enforcement action taken by the Bank and/or the PRA.
Review of ring-fencing rules
25 January 2024
This report sets out the conclusions of the Prudential Regulation Authority’s review of its rules on ring-fencing, which has been conducted throughout 2023. Most of the ring-fencing regime is contained in legislation, but there are also some requirements set by the PRA in its Rulebook, supported by supervisory statements. It is these PRA rules only that are in scope of this review; however, ring-fenced bodies are subject to the Rulebook as a whole.
Letter from Rebecca Jackson ‘International banks Supervision: 2024 priorities’
11 January 2024
Letter to Chief Executive Officers of PRA regulated International banks active in the UK.
Letter from David Bailey and Laura Wallis: ‘UK Deposit Takers Supervision: 2024 priorities’
Letter to Chief Executive Officers of PRA regulated UK deposit takers.
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: