Supervision

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

Supervisory approach

We are responsible for the prudential regulation of banks, building societies, credit unions, insurers and major investment firms. We aim through our 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. 

Our approach documents set out how we carry out our role in practice.

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 our 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.

Our 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 us - 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 Persons review is one of the regulatory tools we can employ under FSMA 2000 (as amended by the 2012 Act).

Under FSMA, there are two types of Skilled Persons reviews that we can commission:

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

The ’Use of Skilled Persons’ Part of the PRA Rulebook sets out the PRA's requirements for a Skilled Persons 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 2022 and will be effective until 31 March 2026. 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 us is published on a quarterly basis.

PRA Q3 2023/24 skilled persons reviews commissioned

Firm feedback survey

Results of the firm feedback survey 2022

Each year, we 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 a team independent of frontline supervision. We conducted the survey from August to October 2022.

We value firms’ participation in the survey. As the regulatory landscape evolves, we seek to understand, both what firms think works well, and what we might do differently. Through the survey, PRA-authorised firms provided feedback on a number of topics, including:

  • our understanding of firms;
  • the firms’ understanding of our regulatory objectives and expectations;
  • our level of challenge to firms;
  • the effectiveness of our relationship with firms;
  • our co-ordination with other regulators and data requests;
  • the clarity and accessibility of prudential policy, rules, and requirements;

We invite firms to make additional comments in these areas, and address topical questions surrounding PRA Supervision. The 2022 Survey topical questions examined the clarity and timeliness of operational resilience policy and post-Covid-19 supervision, both of which, overall, received positive comments. We also ask firms to suggest three improvements for the PRA.

Which firms were included in the 2022 survey?

As in previous years, we sent a standardised survey to a sample of firms, which covers all types of firms that the PRA supervises. As part of the 2022 Survey, we resumed meetings with a cross-section of firms to discuss their views in more detail. This is something we used to do prior to Covid-19, and plan to continue in the 2023 Survey.

How are the survey results used?

We analyse firms’ responses to identify areas where we could improve how we supervise firms, and good practices we should maintain and apply more broadly where appropriate. This analysis is reported to our senior management and committees, and is shared with the PRA’s Practitioner Panel. We also follow up on the points raised by firms, including with the relevant supervisory directorate, being mindful of any confidentiality and sensitivity issues.

Main messages from the 2022 survey and our response

Despite a slight decline in scores from 2021, the scores remain high and indicate, overall, firms continue to hold positive views about the PRA. Firms provided the most positive scores in regard to their understanding of the PRA’s statutory objectives and expectations, however, as in previous years, they provided the lowest scores regarding their views on the PRA’s coordination with other regulatory bodies.

Five emergent themes from the 2022 survey were identified, and are outlined below, alongside explanation of how we are responding:

Emerging theme
PRA’s response
Firms perceived a slight decline in the quality of overall supervisory relationships
The return to business-as-usual supervision post-Covid should help strengthen relationships between the PRA and management at firms. We are also reviewing our internal training delivery, to ensure newly appointed and experienced supervisors are fully supported in building their technical and non-technical skills.
Firms desired greater engagement on new and revised policy
In September, we published DP4/22, describing how we intend to approach policymaking, given our wider rule-making responsibilities under the FSM Bill. DP4/22 aims to enhance our engagement with firms, as we prepare to take on this expanded role.
Firms desired more effective engagement with specialists and technical teams
We have formulated a set of principles, with the aim of providing co-ordination between specialists and supervision teams internally, which should lead to increased effectiveness in the delivery of our technical judgements to firms.
Firms expressed increased need for more proportionality in supervision in their responses this year
We have been developing a more proportionate approach to supervision, including through the review of Solvency II, the consultation on liquidity and disclosure requirements for simpler-regime firms and embedding the supervisory approach around the new risk model which expects only core assurance work for in-tolerance firms.
Several newly authorised insurance branches which had previously passported into the UK from the EU asked for a more holistic approach to branch supervision
We have increased communications with firms and reduced reporting requirements. We are also considering delivering a CP proposing a more ‘holistic’ approach to the supervision of third country insurance branches.
This page was last updated 13 December 2023