Supervisory approachThe 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.
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.