Supervision

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

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This page was produced before the UK’s withdrawal from the EU. The UK has now entered into a transition period, due to end on 31 December 2020, during which EU law will continue to apply. We will update this page at a later date, as appropriate, to reflect the legal and regulatory framework applicable at the end of the transition period.

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 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 the PRA 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 2017 and will be effective until 31 March 2022. In May 2020, due to the effects of Covid-19, the effective end date of the panel was extended to 31 March 2022, from 31 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 Q4 19/20 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 a team 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 from the PRA to firms
  • the effectiveness of firms’ relationships with us
  • our co-ordination with other regulators and data requests
  • our approach to new technologies

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 and a selection of these are invited to participate in a roundtable follow-up meeting. The smaller firms being surveyed in 2020 can expect to receive a notification on Wednesday 6 May 2020.

PDFFirm Feedback Survey: Small and medium-sized firms

The surveys have now been simplified and aligned for all firms.

How are the survey results used?

We analyse 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. We also follow up on the points, including with the relevant supervisory directorate, being mindful of any confidentiality issues.

What has changed as a result of the surveys?

In response to feedback received 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.

Following feedback about issues with the reliability and functionality of the secure email portal, we have worked to resolve this problem and improve the performance of the portal. 

New issues in 2019

A few new topics have been raised during the last year’s survey including:

  • Firms have more frequently expressed concerns about the timeliness of the Senior Managers and Certification Regime (SMCR), (approvals and commented that it would be helpful to have a better information flow throughout approvals, including what candidates could do while awaiting approvals, and improved coordination between the PRA and FCA. Poor quality applications are the main cause of the delays and there are plans in place to work to improve the quality of the applications. A fewer number of firms reported similar issues for model application approvals. 
  • We have had feedback that firms have had difficulties using the Bank of England Electronic Data Submission (BEEDs) portal, including a short window of time to submit data and user-related issues, such a password problems, an absence of automatic calculation functions and guidance deficiencies. The Bank is monitoring the performance of the BEEDs portal to ensure its functionality. 

Are the results of the survey published?

We published the aggregated results for the 2018/19 survey on 20 December 2019.

Previous aggregated survey results

14 December 2018: We published the aggregated results for the 2017/18 survey.
12 December 2017: We published the aggregated results for the 2016/17 survey.

Please see The National Archives for historic supervision information

This page was last updated 01 June 2020
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