Supervision

We supervise banks, building societies, credit unions, major investment firms and insurers to judge whether they are complying with our policies.

Supervisory approach

The Prudential Regulation Authority (PRA) is responsible for the prudential regulation of banks, building societies, credit unions, insurers and major investment firms. It aims through its supervision to develop a rounded, robust and comprehensive view of these firms, to judge whether they are being run in a safe and sound manner, and whether insurers are protecting policyholders appropriately. 

The PRA approach documents set out how we carry out our role in practice. All versions - current and past - are available from the link below.

The PRA's approach to supervision documents

Regulating smaller firms

We take a different approach to supervising the smaller firms that we regulate, due to their limited potential to cause harm to the financial system.

Credit unions, small overseas banks, small overseas insurers and mutual insurers are in the Prudential Regulation Authority (PRA) lowest category of potential impact. At an individual level, these firms have little capacity to cause significant harm to the stability of the financial system. They could, however, generate some disruption to the financial system at an aggregate level, in the event of problems across a whole sector.

Additionally, our objectives require us to promote the safety and soundness of all the firms it supervises, and to contribute to securing an appropriate degree of protection for all policyholders. This motivates a baseline level of supervisory monitoring for these firms.

The PRA's approach to supervising smaller firms

Our supervisory approach for smaller firms includes:

  • supervising firms on a portfolio basis using automated tools to analyse your regulatory returns
  • examining individual firms when a risk crystallises (as discovered through, for example, a visit to the firm, or an approach from the firm itself), or in response to authorisation requests from the firm
  • conducting peer group analysis across sectors as a whole, to develop a clear understanding of the risks posed by both small firms in aggregate and by a typical firm
  • conducting annual assessments of these firms, but in large peer groups.

We do not visit smaller firms on a fixed, regular schedule. But all firms, regardless of category, are subject to on-site work by the PRA - with a period of notice - at any time.

View further information and materials for credit unions.

Our rules and expectations for branches are available in Supervising international banks: the PRA's approach to branch supervision - PS8/14.

View further information and materials for run-off firms. 

Contacts for smaller firms

These firms do not have a named supervisor. Instead, they should contact our Firm Enquiries Team at PRA.FirmEnquiries@bankofengland.co.uk or by phone on +44 (0)20 3461 7000.

Skilled Persons Reviews

A skilled person review is one of the regulatory tools we can employ under FSMA as amended by the 2012 Act. There are two types of skilled person review under FSMA as amended by the 2012 Act that gives us the power to commission reviews by Skilled Persons as required:

  • s166 Reports by Skilled Persons; and/or
  • s166A Appointment of Skilled Persons to collect and update information.

We use these powers to obtain an independent view of aspects of a firm's activities that, for example cause concern or where further analysis required. The use of Skilled Persons Part of the PRA Rulebook sets out the PRA's requirements for a skilled person review. Reports by Skilled Persons - SS7/14 sets out our policy on, and expectations for, the use of these powers.

The Skilled Person Panel (see list of Skilled Person Panel suppliers), used for directly commissioned s166 reviews, commenced in April 2017 and will end in March 2021. The description of the lots can be accessed through the Skilled Person Panel Lot descriptions.

Quarterly information

Information on the skilled persons reviews commissioned by the PRA is published on a quarterly basis.

PDFPRA Q3 18/19 skilled persons reviews commissioned

Firm feedback survey

We proactively seek 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. This process is overseen by the PRA’s Supervisory Oversight Function (SOF) which is independent of frontline supervision. 
The survey gives PRA-authorised firms the opportunity to comment on a number of topics, including:

  • our understanding of firms
  • the firm’s understanding of the PRA’s regulatory objectives and expectations
  • our level of challenge to firms
  • the effectiveness of firms’ relationships with us
  • our co-ordination with other regulators and data requests.

We provide firms with the opportunity to make additional comments and ask for three improvements that we could make.  

We appreciate firms’ participation in the survey. It is important that we continue to understand, as the PRA evolves, both what firms think works well and what we might do differently. 

Which firms are included? When should firms expect to receive the survey?

The largest firms that we supervise receive the survey every year. Some of these firms are also invited to follow-up meetings to discuss their views in more detail.

PDFFirm Feedback Survey: Largest firms

Each year a sample of the small and medium-sized firms are also invited to complete the survey. A sample of these is invited to participate in a roundtable follow-up meeting. The firms included in the sample for 2019 can expect to receive a notification on Wednesday 8 May 2019.

PDFFirm Feedback Survey: Small and medium-sized firms

Following a review of the process, the surveys have now been simplified and aligned for all firms. 

How are the survey results used?

SOF analyses firms’ responses to identify both good practices and areas where we could improve how we supervise firms. This analysis is reported to PRA senior management and shared with the PRA’s Practitioner Panel. Firm-specific feedback is also selectively followed up by SOF and/or passed on directly to the relevant supervisory directorate, being mindful of any confidentiality issues.

What has changed as a result of the surveys?

In response to feedback received in the 2016/17 survey about information requests, we have reduced the number of requests made and ensured that each request is necessary. We have also tried to co-ordinate some requests to avoid duplication.

We have improved handover processes, taking on board the impact that changes in supervisory teams can have on firms. While many firms understand that we need to redeploy staff periodically, we have made sure new teams are better informed when they take responsibility for firms.

New topics

A number of new topics were raised during the 2017/18 survey including:

  • Following the publication of Consultation Paper 11/18 ‘Changes to reporting format’, we requested feedback relating to a public working draft in order to ensure systems could be updated in time for year-end reporting. Firms commented that they did not have time to review the working draft within the deadline. In light of the feedback, we will in future ensure that we explain the purpose of public working drafts clearly and give advance warning where possible to give firms and vendors at least two weeks to respond with comments.
  • We have had feedback that firms are sometimes finding it difficult to navigate our website. Where we have been given specific examples of such difficulties, we are looking to make improvements.
  • Finally, we have had feedback about the reliability and functionality of the secure email portal. We think that the problems have since been resolved but are investigating this further. We also use other secure email systems, so firms that have difficulty with the portal should speak to their supervisor about the alternatives.

Are the results of the survey published?

We published the aggregated results for the 2017/18 survey on 14 December 2018.

Previous aggregated survey results

12 December 2017: We published the aggregated results for the 2016/17 survey.

Please see the National Archives for historic supervision information

The National Archives

This page was last updated 13 December 2018
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