PS1/26 represents the UK Prudential Regulation Authority's final implementation framework for the Basel 3.1 international banking standards, effective 1 January 2027 (with market risk internal models delayed to 1 January 2028). This policy statement establishes mandatory capital, credit risk, operational risk, and market risk requirements for UK-regulated banks, building societies, and investment firms, addressing post-financial crisis shortcomings in risk-weighted asset (RWA) calculations and capital adequacy frameworks.
What Changed
*Credit Risk Framework**
Implementation of restrictions on Internal Ratings-Based (IRB) approach scope, effective 1 January 2027, with firms required to reclassify certain exposures (e.g., slotting approach IPRE exposures) as High-Volatility Commercial Real Estate (HVCRE) where applicable.
Minor clarifications and amendments to the Standardised Approach and credit risk mitigation techniques.
*Operational Risk**
Updated Business Indicator Component (BIC) calculation methodology requiring inclusi
What You Need To Do
*Immediate (by mid-2026)
*Conduct impact assessment
*Review IRB permissions
*Assess FRTB-IMA readiness
*Arrange board-level assurance
Key Dates
20 January 2026– PRA publishes PS1/26 (final rules)
1 January 2027– Effective date for Basel 3.1 implementation (credit risk, operational risk, reporting/disclosure, IRB scope restrictions, SDDT regime)
1 January 2027– Interim period begins for FRTB-IMA transition; existing IMA permissions retained; out-of-scope positions move to ASA/SSA
1 January 2028– FRTB-IMA implementation effective date
2026 ICAAP submission deadline– Must include Basel 3.1/SDDT impact assessmentDEADLINE
The Prudential Regulation Authority (PRA) has published the final rules for the implementation of Basel 3.1 standards in the UK, with an effective date of January 1, 2027. The rules aim to enhance the resilience of banks and improve the stability of the financial system. Firms must review and update their policies and procedures to ensure compliance with the new requirements.
What Changed
The PRA has introduced new rules for the calculation of risk-weighted assets, including changes to the credit risk standardised approach, market risk framework, and operational risk requirements. The rules also include amendments to the definitions of probability of default, loss given default, and conversion factor.
What You Need To Do
Review and update credit risk policies and procedures to ensure compliance with the new standardised approach
Assess the impact of the new market risk framework on trading book positions and capital requirements
Update operational risk management frameworks to reflect changes to the Business Indicator and subcomponents
Key Dates
1 Jan 2027Basel 3.1 rules take effectDEADLINE
1 Jan 2028Internal model approach for market risk takes effectDEADLINE
Non-Compliance Risk
Non-compliance with the new rules may result in enforcement action, fines, or other regulatory penalties
The PRA's PS2/26 finalizes the retirement of the "refined methodology" in Pillar 2A capital requirements, effective 1 January 2027, aligning with Basel 3.1 implementation to simplify the framework by eliminating an operationally burdensome adjustment originally designed to address conservatism in the standardized approach (SA) to credit risk. This matters for compliance professionals as it reduces complexity in ICAAP and SREP processes, with expected neutral aggregate capital impact, though firm-specific effects may vary and require supervisory engagement.
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What Changed
Retirement of refined methodology: The refined methodology, introduced in 2018 (PS22/17) to mitigate perceived conservatism in CR SA relative to IRB for lower-risk assets, is fully retired from Pillar 2A as Basel 3.1 CR SA enhancements achieve similar risk sensitivity without it. No transitional period; immediate replacement by Basel 3.1 standards.
Amendments to SS31/15: Updates to Supervisory Statement 31/15 on ICAAP and SREP (Appendix 1), including minor prior adjustment to paragraph 5.12A for
What You Need To Do
Review and update ICAAP/SREP processes
Recalculate Pillar 2A requirements
Align with related frameworks
Monitor firm-specific impacts
Governance and reporting
Key Dates
2024CP9/24 consultation on streamlining Pillar 2A, including proposal to retire refined methodology.
28 October 2025PS18/25 near-final policy published.
20 January 2026PS2/26 final policy published.
1 January 2027Effective date for retirement of refined methodology; aligns with Basel 3.1 implementation (PS1/26), CRR restatement (PS3/26), and SDDT simplified regime (PS4/26).
Compliance Impact
Urgency: High – With less than 11 months to 1 January 2027 effective date (as of January 2026 publication), firms face immediate need to remodel Pillar 2A under Basel 3.1, potentially affecting capital planning, stress testing, and regulatory reporting. Non-compliance risks supervisory scrutiny duri
The Prudential Regulation Authority (PRA) has finalized the policy to retire the refined methodology to Pillar 2A, which will take effect on January 1, 2027, aligning with the implementation of the Basel 3.1 standards. This change affects all PRA-regulated banks, building societies, and designated investment firms. The refined methodology will no longer apply to these firms, including Small Domestic Deposit Takers (SDDTs), as they will be subject to the Basel 3.1 standardized approach to credit risk.
What Changed
The PRA has retired the refined methodology to Pillar 2A, which was previously used to determine capital requirements for firms. The new policy aligns with the Basel 3.1 standards and introduces a simplified capital regime for SDDTs.
What You Need To Do
Update internal capital adequacy assessment processes (ICAAP) to reflect the changes to Pillar 2A
Review and implement the Basel 3.1 standardized approach to credit risk
Ensure compliance with the new simplified capital regime for SDDTs, if applicable
Key Dates
1 Jan 2027The policy to retire the refined methodology to Pillar 2A takes effect, aligning with the implementation of the Basel 3.1 standardsDEADLINE
Non-Compliance Risk
Failure to comply with the new policy may result in enforcement action, fines, or other regulatory penalties
PS3/26 is the PRA's final policy statement restating the remaining provisions of the UK Capital Requirements Regulation (CRR) into the PRA Rulebook and related policy materials, effective 1 January 2027. This represents a critical step in the UK's transition away from assimilated EU law, consolidating fragmented regulatory requirements into a unified domestic framework while introducing targeted amendments to securitisation rules and External Credit Assessment Institution (ECAI) mapping.
What Changed
*Restatement of CRR Provisions**
The PRA is transferring remaining CRR requirements from the UK CRR into the PRA Rulebook without material changes to policy substance, except for targeted securitisation amendments. This follows the earlier PS12/25, which finalised the first tranche of restatement requirements in 2026.
*Policy Materials and Supervisory Guidance
PS3/26 introduces or amends multiple supervisory statements and statements of policy:
New: SS4/24 (Credit risk: Internal Ratings Based A
What You Need To Do
*Immediate (by Q2 2026)
*Review applicability
*Assess impact
*Identify policy changes
*Medium-term (by Q3 2026)
Key Dates
20 January 2026- PS3/26 final policy statement published
28 October 2025- PS19/25 (near-final policy) published
1 January 2027- All policies take effect; HM Treasury commencement regulations revoke relevant CRR provisions and replace them with PRA Rulebook rules and policy materials
The Prudential Regulation Authority (PRA) has published a policy statement (PS3/26) that restates the remaining relevant provisions in the Capital Requirements Regulation (CRR) within the PRA Rulebook and other policy materials. This change aims to ensure that the PRA's rules and policies are consistent with the UK's withdrawal from the EU. The policy statement is relevant to PRA-authorised banks, building societies, and other financial institutions.
What Changed
The PRA has restated the remaining relevant provisions in the CRR within the PRA Rulebook and other policy materials, including amendments to supervisory statements and the introduction of new statements of policy. The changes include updates to the securitisation requirements and the introduction of new rules on credit risk and internal ratings-based approaches.
What You Need To Do
Review and update internal policies and procedures to ensure compliance with the restated CRR provisions
Ensure that risk management practices are aligned with the updated rules on credit risk and internal ratings-based approaches
Review and update securitisation policies and procedures to ensure compliance with the amended requirements
Key Dates
1 Jan 2027The restated CRR provisions take effectDEADLINE
Non-Compliance Risk
Failure to comply with the restated CRR provisions may result in enforcement action, fines, or other regulatory penalties
Related Regulations
Capital Requirements Regulation (CRR)Basel 3.1Solvency II
PS4/26 finalizes the **simplified capital regime for Small Domestic Deposit Takers (SDDTs)**, a tailored prudential framework designed to reduce regulatory burden while maintaining capital resilience for smaller, domestically-focused UK banks and building societies. This represents the completion of Phase 1 of the PRA's "Strong and Simple" initiative and introduces materially lighter capital, liquidity, and reporting requirements for qualifying firms, with implementation effective January 1, 2027.
What Changed
*Simplified Capital Framework
The final policy introduces a dedicated capital regime** for SDDTs that descopes them from standard CRR Firms requirements. SDDTs are now subject to tailored Pillar 2 methodologies (SoP5/25) and simplified ICAAP/SREP processes (SS4/25) rather than the standard frameworks.
*Liquidity Simplifications
Qualifying SDDTs with 50% or more retail deposit funding** are exempted from the Net Stable Funding Ratio (NSFR) requirements, replacing this with a simpler Retail Depos
What You Need To Do
*Immediate (by January 20, 2026)
*Assess SDDT eligibility – Determine whether your firm meets all seven qualification criteria, particularly the £20bn asset threshold and domestic asset location requirement
*Review consolidation group structure – If part of a group, confirm which entity will serve as the SDDT consolidation entity responsible for certification
*Implement SoP2/23 changes – Adopt updated operating procedures for the SDDT regime
*Update ICAAP/ILAAP processes – Implement new frequency requirements for capital and liquidity adequacy assessments
Key Dates
January 20, 2026– PS4/26 published; changes to SoP2/23 and ICAAP/ILAAP frequency requirements take effect
January 20, 2026– Revocation of ICR firm/consolidation entity definitions and deletion of SoP3/23 effective
January 1, 2027– Simplified capital regime for SDDTs takes effect; SS4/25 brought into effect in full; SDDTs removed from SS31/15 scope
The Prudential Regulation Authority (PRA) has introduced a simplified capital regime for Small Domestic Deposit Takers (SDDTs) to reduce regulatory complexity while maintaining adequate capital. The new regime will take effect on 2027-01-01. This change aims to simplify capital requirements for smaller banks and building societies.
What Changed
The PRA has introduced a new simplified capital regime for SDDTs, which includes changes to the PRA Rulebook, supervisory statements, and statements of policy. The regime also introduces new reporting templates and instructions.
What You Need To Do
Review and update capital adequacy assessments to ensure compliance with the new simplified capital regime
Implement new reporting templates and instructions for SDDTs
Update internal policies and procedures to reflect changes to the PRA Rulebook, supervisory statements, and statements of policy
Key Dates
20 Jan 2026Publication of the final policy statement
20 Jan 2026Early implementation of changes to ICAAP updates and reverse stress-testing
1 Jan 2027The SDDT capital regime takes effectDEADLINE
Non-Compliance Risk
Enforcement action, fines, or license revocation for non-compliance with the new simplified capital regime
The PRA and FCA have jointly issued consultation paper CP1/26 proposing to set the **Management Expenses Levy Limit (MELL) for the Financial Services Compensation Scheme (FSCS) at £113 million for 2026/27**, comprising a £108 million management expenses budget and a £5 million unlevied reserve. This consultation determines the maximum amount the FSCS can levy on authorised financial services firms to fund its statutory compensation scheme operations, directly affecting compliance costs for all regulated entities.
What Changed
The proposed MELL for 2026/27 introduces the following material changes:
Budget increase of £4.4 million from 2025/26 (from approximately £103.6 million to £108 million), broadly aligned with inflation
Nominal reduction of £6.6 million on a like-for-like basis when excluding the cost of enhancements to the FSCS's revolving credit facility (RCF)
Real terms reduction of £11 million when accounting for inflation adjustments
RCF enhancement to £3 billion to support the Bank of England's recapitalis
What You Need To Do
*Review the consultation paper (CP1/26) in detail, particularly Appendices 3 and 4 detailing budget line items and PRA/FCA funding class allocations
*Assess levy impact on your firm's 2026/27 budget based on your regulated business volume and funding class allocation
*Prepare internal stakeholder communication regarding the £4
*Monitor the FSCS January 2026 budget update for detailed cost breakdowns and compensation levy forecasts
*Submit consultation responses if your firm wishes to comment on the proposal by 10 February 2026
Key Dates
10 February 2026– Consultation deadline for comments on CP1/26DEADLINE
1 April 2026– Effective date: proposed MELL applies from start of FSCS financial year
On 12 November the PRA hosted a roundtable meeting with Chief Financial Officers (CFOs) of systemically important firms operating in the UK, to discuss Future Banking Data (FBD).
The PRA Regulatory Digest is for people working in the UK financial services industry and highlights key regulatory news and publications delivered for the month.
The Berne Financial Services Agreement (BFSA) is a mutual recognition agreement between the UK and Switzerland, effective from 1 January 2026. This agreement enhances cross-border market access for financial services between the two countries.
Supervisory Statement SS2/25 from the Prudential Regulation Authority (PRA) provides guidance on prudential considerations for UK insurance and reinsurance undertakings transferring risk to Special Purpose Vehicles (SPVs). It clarifies expectations for ensuring such transfers comply with Solvency II requirements, focusing on risk transfer validity, capital relief recognition, and supervisory approval processes. This matters because it aims to enhance transparency and risk management in reinsurance arrangements, reducing potential regulatory arbitrage while supporting efficient risk mitigation for insurers amid evolving market dynamics.
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What Changed
Risk Transfer Validation: Firms must demonstrate that SPV risk transfers provide genuine economic risk transfer (ERT), not just accounting or regulatory capital relief, with PRA emphasizing substance over form (e.g., no "orphan" SPVs without genuine third-party capital).
Capital Relief Criteria: Introduces stricter tests for recognizing capital relief, including full collateralization requirements, independent third-party guarantees, and prohibitions on circular reinsurance structures where the
What You Need To Do
Immediate Review (by Q1 2026)
Governance Updates
Pre-Transaction Processes
Reporting Enhancements
Remediation
Key Dates
July 2025Publication date of SS2/25.
31 December 2025End of consultation period (feedback due on draft issued earlier in 2025).DEADLINE
1 January 2027Effective date for new SPV risk transfers; all material transactions post this date require PRA pre-notification.
30 June 2027Deadline for firms to review and remediate existing SPV arrangements for compliance (with phased reporting starting Q1 2027).DEADLINE
from 2027.
Compliance Impact
Urgency: High – This is not a full regime shift but imposes immediate review obligations on firms with SPV exposure (estimated 20-30% of PRA-regulated insurers). Non-compliance risks capital add-ons, transaction disapprovals, or enforcement under PRA's Fundamental Rules, especially as PRA ramps up t
PS27/25 finalizes the PRA's policy to delete 37 redundant banking regulatory reporting templates (34 FINREP, 2 COREP, and PRA109) as the first phase of the Future Banking Data (FBD) programme, aiming to reduce reporting burdens while maintaining supervisory data quality. This matters for PRA-regulated banks as it delivers immediate cost savings and signals broader regulatory simplification, aligning with the PRA's secondary competitiveness and growth objective.
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What Changed
Deletion of 37 whole reporting templates identified as duplicative, outdated, or low-value: 34 FINREP templates, 2 COREP templates (C05.01 and C05.02, now obsolete), and PRA109.
Consolidation of remaining FINREP scoping provisions into a single section of the PRA Rulebook (new Chapters 5A–5F of the Reporting (CRR) Part), with clarifications to unclear or duplicative conditions.
Alignment of FINREP remittance deadlines to 30 business days for reports under Article 430(3), Article 11(2), and new C
What You Need To Do
Review and update internal reporting systems, processes, and controls to cease submission of the 37 deleted templates for reference dates from 31 December 2025 onwards
Confirm applicability of consolidated FINREP scoping rules (Chapters 5A–5F) and adjust scoping for remaining templates, incorporating clarified conditions
Assess eligibility for individual FINREP waivers under the updated framework if part of a UK consolidation group; apply to PRA if criteria met (90-95% asset contribution)
Update compliance policies and training to reflect SS34/15 amendments and aligned remittance deadlines
Review Pillar 3 disclosure obligations for any ongoing requirements tied to deleted templates and prepare for potential future changes
Key Dates
8 December 2025- Publication of PS27/25, finalizing policy and responses to CP21/25 consultation.
31 December 2025- Effective date for revised rules, amended SS34/15, and deletions; applies to reporting reference dates falling on or after this date (avoids 2025 Q4 submissions where relevant).
11 November 2025- Q3 2025 remittance deadline (precedes PS publication, so no concession for early non-reporting).DEADLINE
Compliance Impact
Urgency: Medium – Changes are simplificatory (deletions reduce burden), with immediate effect from 31 December 2025, but no new requirements or penalties for non-compliance with deleted items; firms must act promptly to decommission processes and avoid erroneous submissions. This matters as it lower
The Prudential Regulation Authority (PRA) has issued PS26/25, finalizing the withdrawal of Supervisory Statement (SS) 20/15, which previously set prescriptive expectations for building societies' treasury and lending activities, effective immediately upon publication on 5 December 2025. This deregulatory move reduces administrative burdens, enhances proportionality across deposit takers, and promotes competition by aligning building societies more closely with banks, while relying on existing tools like the PRA Rulebook, SMCR, and routine supervision for risk management. It matters for compliance teams as it eliminates specific guidance often misinterpreted as binding requirements, freeing firms to tailor risk frameworks but requiring vigilance on broader prudential expectations.
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What Changed
Full deletion of SS20/15: Removes all expectations on treasury and lending activities, including the "Treasury Approaches" framework, without replacement.
Consequential amendments: Updates SS31/15 (Internal Capital Adequacy Assessment Process and Supervisory Review and Evaluation Process) to excise references to SS20/15.
Alignment with broader policy: Addresses inconsistencies with PRA's approach for banks, improved sector risk management maturity, and proportionality for smaller firms; supports
What You Need To Do
Review and update policies
Assess risk management
Update governance documents
Engage supervisors
Monitor related reforms
Compliance Impact
Urgency: Medium – Effective immediately (5 December 2025), but deregulatory nature reduces burdens rather than imposing new obligations; critical for year-end 2025/early 2026 planning to avoid legacy SS20/15 misapplication. Matters as it shifts from prescriptive "hard limits" (often treated as rules
This report has been informed by the PRA and FCA’s ongoing regulation and supervision of mutuals and by direct engagement with mutuals and their trade associations in sessions around the country throughout 2025.
CP22/25 is a consultation paper on post-implementation amendments to UK Solvency II reporting and disclosure requirements, published by the PRA on 4 December 2025. The consultation addresses feedback and queries from insurance firms following the substantial reduction in reporting templates implemented at the end of 2024, clarifying expectations for compliance with the revised Reporting Part of the PRA Rulebook across multiple technical areas including accident/underwriting year reporting, annuity reporting by currency, and internal model governance disclosures.
What Changed
The consultation introduces clarifications and amendments to Solvency II reporting requirements in several critical areas:
*Reporting Framework Modifications
Accident or underwriting year reporting: The PRA sets expectations for how firms should apply options within the Reporting Part of the PRA Rulebook regarding temporal classification of claims.
Annuity reporting by currency: Specific guidance on reporting annuities stemming from non-life obligations disaggregated by currency.
RBNS claims de
What You Need To Do
*Immediate Actions (January-February 2026)
*Review consultation paper
*Assess applicability
*Identify gaps
*Engage supervisory contacts
Key Dates
4 December 2025- PRA published CP22/25 consultation paper
31 December 2025- Baseline date for commencement of new annual quantitative reporting template requirements (AoC.01) for firms with financial year-end on or after this date
31 December 2025- Baseline date for commencement of quarterly QMC.01 reporting for internal model firms with financial year-end on or after this date
55 business days after quarter-end- Deadline for quarterly QMC.01 submission (internal model firms)DEADLINE
100 business days after financial year-end- Deadline for annual AoC.01 submission (internal model firms and groups)DEADLINE
PS25/25 is the PRA's policy statement providing feedback on CP10/25 and issuing updated Supervisory Statement SS5/25, which replaces SS3/19 to enhance banks' and insurers' management of climate-related financial risks through strengthened governance, risk management, scenario analysis, data quality, and disclosures. It matters because it sets a higher regulatory bar for embedding climate risks proportionately into core processes like ICAAP, ILAAP, ORSA, and financial reporting, promoting resilience and strategic decision-making amid evolving climate threats.
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What Changed
The main changes in SS5/25 from SS3/19 and CP10/25 responses include:
Proportionate application clarification: New 'Overarching aims' section in Chapter 3 explains how firms should tailor expectations to their climate risk exposure, business size, and complexity via a two-step process (assess materiality, then respond).
Governance strengthening: Boards and senior management must actively oversee climate risks, embedding them in strategy and ensuring accountability.
Risk management enhancements:
What You Need To Do
Conduct gap analysis against SS5/25 within 6 months and remediate (e
Integrate climate risks into board oversight, strategy, risk registers, ICAAP/ILAAP (banks), ORSA/stress testing (insurers), and financial reporting
Perform CSA exercises commensurate with exposures, using suitable scenarios to inform decisions; enhance data quality and disclosures
Ensure senior accountability and alignment with standards like SS1/21
Key Dates
3 December 2025- PS25/25 and SS5/25 published; SS5/25 effective immediately, replacing SS3/19.
Within 6 months (by ~June 2026)- Firms assess gaps against new expectations and develop remediation plans (industry guidance).
Ongoing- Forward-looking, strategic implementation proportionate to risks; PRA may request progress evidence.
Compliance Impact
Urgency: High – Effective immediately (3 Dec 2025), requiring significant uplift to existing approaches; non-compliance risks supervisory scrutiny, as PRA expects ambitious, ongoing progress and may request evidence. Matters for capital/liquidity planning, resilience, and strategic viability amid ma
SS5/25 is the PRA's updated supervisory statement, published on 3 December 2025, replacing SS3/19 and setting enhanced expectations for banks and insurers to manage climate-related risks through governance, risk management, scenario analysis, data quality, and disclosures. It matters because it represents a step change from awareness-raising to embedding robust, proportionate practices that integrate climate risks into core prudential processes like ICAAP, ILAAP, ORSA, and capital planning, aligning with the PRA's objectives for firm safety and soundness amid evolving physical and transition risks.
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What Changed
Replaces SS3/19 entirely: Introduces a more mature, consolidated framework reflecting international standards (e.g., BCBS), with detailed transmission channels for climate risks across credit, market, liquidity, insurance, and operational categories.
Governance enhancements: Emphasizes board accountability, integration into business strategy, climate risk appetite statements, and linkage to Senior Managers & Certification Regime (SM&CR) without new Senior Management Functions (SMFs); promotes ch
What You Need To Do
Conduct materiality assessment of climate risks to scope proportionality (leverage TCFD/CSRD work)
Embed climate risks in governance
Integrate into risk frameworks
Perform climate scenario analysis
Enhance data
Key Dates
3 December 2025Publication of PS25/25 and SS5/25; replaces SS3/19 effective immediately.
Within 6 months of 3 December 2025 (by ~3 June 2026)Firms assess gaps against new expectations and develop implementation plans.
April 2025Consultation paper CP10/25 issued (feedback incorporated in final policy).
Compliance Impact
Urgency: High – Effective immediately with a 6-month window (~June 2026) for gap closure, this demands significant operational uplift (e.g., data, scenarios, integration) amid PRA's shift to enforcement; non-compliance risks supervisory action, given climate risks' materiality to prudential stabilit
The PRA Regulatory Digest is for people working in the UK financial services industry and highlights key regulatory news and publications delivered for the month.
PS23/25 from the PRA and FCA finalizes amendments to Binding Technical Standards (BTS) 2016/2251 under UK EMIR, introducing an indefinite exemption for single-stock equity options and index options from bilateral margin requirements, removing IM obligations on legacy contracts for firms falling below thresholds, and allowing alignment with third-country jurisdictions' timelines for IM assessments. These changes reduce operational burdens and enhance competitiveness for UK firms trading non-centrally cleared derivatives, following feedback from CP5/25, while maintaining prudential standards.
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What Changed
Indefinite exemption for equity options: Single-stock equity options and index options are permanently exempted from UK bilateral initial margin (IM) and variation margin (VM) requirements, replacing a temporary exemption ending 4 January 2026. This balances safety with international competitiveness, as capital can substitute for margin.
Legacy contracts relief: Firms falling below the Average Aggregate Notional Amount (AANA) threshold no longer need to exchange IM on outstanding legacy non-cent
What You Need To Do
Assess cross-border transactions
Conduct gap analysis on margin calculations, collateral management, and reporting; train front-to-back office teams on changes
Retain records of AANA calculations and threshold monitoring to justify exemptions or relief
For firms with collected IM on now-exempt legacy positions, evaluate release options per updated FCA instrument language
Key Dates
11 August 2025PRA submits final technical standards instrument to HM Treasury (HMT).
15 August 2025FCA submits final technical standards instrument to HMT.
11 September 2025HMT deems approval of PRA’s instrument.
24 September 2025HMT deems approval of FCA’s instrument.
27 November 2025Amendments to BTS 2016/2251 effective date.
Compliance Impact
Urgency: High – Effective immediately since 27 November 2025 (over a month ago as of current date), firms risk non-compliance if systems still enforce outdated IM/VM for exemptions; operational fixes are needed urgently to avoid breaches, fines, or disputes, especially with phase-out of temporary eq
The PRA held roundtable meetings on artificial intelligence and machine learning (AI and ML) in the context of Supervisory Statement (SS)1/23 ‘Model risk management principles for banks’
AI Analysis
The Prudential Regulation Authority (PRA) held roundtable sessions on 20 and 22 October 2025 with 21 regulated firms to discuss AI and machine learning (AI/ML) adoption under Supervisory Statement SS1/23 on model risk management (MRM) principles for banks. This matters because it highlights PRA's strategic supervisory focus on AI/ML model risks, urging firms to enhance governance, risk appetite, monitoring, and validation to mitigate opacity, overfitting, and rapid performance degradation in these models. https://www.bankofengland.co.uk/prudential-regulation/publication/2025/november/pra-holds-model-risk-management-roundtable-on-ai | https://www.bankofengland.co.uk/-/media/boe/files/prudential-regulation/publication/2025/november/ai-roundtable-oct-2025.pdf
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What Changed
This is not a formal rule change but supervisory guidance via roundtable insights reinforcing SS1/23 principles (effective since 2023). Key emphases include:
Risk appetite: Boards must articulate AI/ML-specific model risk appetite pre-deployment to avoid exceeding tolerances, given higher uncertainty from opacity.
Model inventories and tiering: Address inaccurate/incomplete inventories and aggregate risks from deploying similar AI/ML across portfolios/jurisdictions; challenge tiering for complex
What You Need To Do
Review and strengthen board-level model risk appetite statements to explicitly cover AI/ML opacity and uncertainty; integrate into governance triggers like re-validation
Enhance model inventories for completeness, aggregate risk assessment, and cross-jurisdictional tiering challenges
Update model development policies to evaluate AI/ML trade-offs (e
Revise ongoing monitoring policies for more frequent, quantitative checks on AI/ML (e
Participate in PRA initiatives like MRM roundtables or AI Consortium for dialogue; align first/second-line defenses per SS1/23
Key Dates
20-22 October 2025- PRA held CRO roundtable sessions with 21 firms on AI/ML MRM.
24 November 2025- PRA published roundtable summary and slides. https://www.bankofengland.co.uk/prudential-regulation/publication/2025/november/pra-holds-model-risk-management-roundtable-on-ai
Compliance Impact
Urgency: Medium - Not critical as no new rules or deadlines, but high relevance for AI/ML users amid PRA's strategic MRM focus; non-compliance risks supervisory actions, given observations of gaps in monitoring and governance. Matters for banks scaling AI (rising adoption per industry views), as una
This joint PRA-FCA consultation (CP23/25 from PRA and Chapter 4 of FCA's CP25/33) proposes policy updates to regulatory fees, levies, and invoice processes for 2026/27, including new fee blocks for emerging activities like PISCES operators and targeted support, alongside adjustments to FOS/FSCS levies and payment timelines. It matters for compliance teams as it directly impacts budgeting, fee calculations, and cash flow management for fee-payers, with potential cost increases and procedural changes effective from April 2026.
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What Changed
New fee structures: Introduction of a periodic fee block for PISCES operators based on regulated income (baseline £2,200 annual fee, variable above £500,000 threshold); extension of fee-block A.13 to include "targeted support" activities (Category 2 variation fee for existing firms, Category 4 for new entrants); registration fees for Deferred Payment Credit (DPC/buy-now-pay-later) activities aligned with Temporary Permissions Regime, added to FOS consumer credit fee-block but excluded from FSCS.
What You Need To Do
Review current fee/levy exposure and model impacts of new blocks (e
Assess invoice processes if paying £50,000+ in FCA/PRA fees; prepare for aligned due dates
Submit consultation responses by deadlines, focusing on targeted support by 9 January 2026
Budget for potential fee increases; monitor Spring 2026 fee-rates CP
For applicants
Key Dates
9 January 2026- Deadline for comments on targeted support proposals (FCA CP25/33 paras 2.11-2.18, questions 3-7).DEADLINE
16 January 2026- Consultation close for all other proposals, including PRA-FCA joint changes; responses to cp25-33@fca.org.uk.
February 2026- FCA publishes feedback and rules on targeted support in Handbook Notice.
March 2026- FCA publishes feedback and rules on all other proposals (including Chapter 4) in Handbook Notice; Spring fee-rates consultation.
April 2026- PRA publishes feedback and rules on Chapter 4; changes effective for 2026/27 fee year (April-March).
Compliance Impact
Urgency: High – Firms must act imminently on consultation responses (deadlines passed as of today, but feedback analysis pending March/April 2026 rules) to influence outcomes; changes affect 2026/27 budgets starting April, with cash flow risks from invoice timing and new fees for emerging activities
The PRA's PS24/25 finalizes rules increasing Financial Services Compensation Scheme (FSCS) depositor protection limits from £85,000 to £120,000 and temporary high balances (THB) from £1 million to £1.4 million for firm failures on or after 1 December 2025, responding to consultation feedback in CP4/25. This matters for PRA-authorized deposit-takers as it enhances consumer protection amid inflation but requires urgent system and disclosure updates to avoid FSCS payout delays or regulatory breaches. Firms must prioritize single customer view (SCV) readiness and phased disclosure revisions to comply efficiently.
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What Changed
Increased Protection Limits: Standard FSCS deposit limit rises from £85,000 to £120,000; THB limit from £1 million to £1.4 million, applying to failures from 1 December 2025.
SCV System Updates: Firms must update SCV systems (used by FSCS for rapid compensation) to reflect new limits from 1 December 2025, including accurate contact details.
Disclosure Materials:
- Update information sheets on FSCS cover to reflect new limits and improve clarity/accessibility; provide to depositors as soon as
What You Need To Do
Immediate (pre-1 Dec 2025)
By 1 Dec 2025
Post-1 Dec 2025 to 31 May 2026
Document changes for audit trails; consider regtech for SCV automation
Key Dates
1 December 2025- New deposit (£120,000) and THB (£1.4 million) limits apply to firm failures on/after this date; SCV systems must be updated; SS18/15 and SoP1/15 effective.DEADLINE
As soon as practicable after 1 December 2025- Provide updated information sheets, stickers/posters, and exclusions lists to depositors (encouraged immediately to avoid confusion).
31 May 2026- Firm deadline for all disclosure material updates and provision to depositors (six-month transition ends).DEADLINE
Compliance Impact
Urgency: High – SCV updates are mandatory by 1 December 2025 with no transition, risking delayed FSCS payouts and enforcement if unprepared; disclosure changes allow six months but PRA emphasizes early action to prevent depositor confusion. Impacts operational resilience and conduct risk; non-compli
This is the first exercise conducted under the new Solvency UK regulatory regime implemented in 2024. The PRA published sector-level results on 17 November 2025 followed by individual firm disclosure for the core scenario on 24 November 2025.
The PRA's Discussion Paper 2/25 (published November 14, 2025) invites UK life insurers to provide feedback on potential regulatory reforms that would enable them to access **alternative forms of capital through risk transfer to capital markets**, outside traditional equity and debt issuance. This initiative aims to address capital constraints in the UK life insurance sector while maintaining policyholder protection and supporting long-term economic growth.
What Changed
The PRA is considering policy reforms centered on six core principles:
*Capital Quality & Quantity**: Alternative life capital structures must not lower the quality or quantity of capital required to support insurance risks.
*Risk Transfer Focus**: Structures should enable patient capital investment aligned with long-term liability profiles, allowing investors to forgo immediate returns for substantial future gains.
*Capital Relief Priority**: Alternative life capital should predominantly del
What You Need To Do
*For UK life insurers
*Assess capital needs
*Prepare consultation response
*Engage with policy development
*Assess structural readiness
Key Dates
6 February 2026– Deadline for stakeholder responses to DP2/25DEADLINE
2026– PRA planned policy design and cost-benefit analysis (alongside HM Treasury work)
The PRA's PS22/25 finalizes an increase in the retail deposits threshold for the leverage ratio requirement from £50 billion to £75 billion, introducing a three-year averaging mechanism for calculations, effective 1 January 2026. This adjustment reflects nominal UK GDP growth since 2016 to maintain the Financial Policy Committee's original risk appetite while smoothing cliff-edge effects for firms like building societies. It matters for major UK banks and similar firms as it alters capital planning and leverage ratio applicability, potentially reducing immediate compliance burdens for those nearing the old threshold.
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What Changed
Retail deposits threshold raised from £50 billion to £75 billion, adjusted upward from the CP2/25 proposal of £70 billion to account for further GDP growth to Q2 2025 (rounded to nearest £5 billion).
Introduction of a three-year moving average for calculating retail deposits metric, replacing point-in-time values to mitigate volatility and aid capital planning, particularly for building societies.
Non-UK assets threshold remains unchanged at £10 billion.
Modifications by consent disapplying leve
What You Need To Do
Review and update internal retail deposits calculations to incorporate three-year moving average methodology starting 1 January 2026
Assess current and projected retail deposits against £75 billion threshold (and £10 billion non-UK assets) to determine leverage ratio applicability and adjust capital planning accordingly
Prepare to meet 3
For firms with modifications by consent
Update governance, risk models, and board reporting to reflect changes; conduct gap analysis against PRA Rulebook appendices in PS22/25
Key Dates
5 March 2025- PRA publishes Consultation Paper CP2/25 proposing £70 billion threshold.
5 June 2025- Consultation response deadline.DEADLINE
12 November 2025- PRA issues PS22/25 with final policy.
1 January 2026- Final policy takes effect, applying new £75 billion threshold and three-year averaging.
30 June 2026- Cessation of modifications by consent disapplying leverage ratio rules.
Compliance Impact
Urgency: High – With effectiveness just after today (1 January 2026), firms near £50-75 billion in retail deposits face immediate recalibration of leverage exposures and capital buffers to avoid breaches, amplified by the shift to averaging which requires historical data reconstruction. Non-complian
The PRA Regulatory Digest is for people working in the UK financial services industry and highlights key regulatory news and publications delivered for the month.
**PS19/25** is the PRA's near-final policy statement finalizing how remaining Capital Requirements Regulation (CRR) provisions will be restated into the PRA Rulebook, effective January 1, 2027. This represents a critical step in the UK's transition away from assimilated EU law, giving the PRA expanded rule-making authority over UK banks, building societies, and investment firms while introducing targeted policy changes to securitisation, credit risk treatment, and ECAI mapping.
What Changed
The near-final policy confirms and finalizes the following substantive amendments:
*Securitisation Requirements**
Largely preserves current requirements and supervisory expectations with targeted policy changes
Introduces a new formulaic p-factor for the standardised approach to securitisation
Establishes new capital rules for certain mortgage exposures
Clarifies supervisory expectations for unfunded credit protection in synthetic Significant Risk Transfer (SRT) securitisations by adding expect
What You Need To Do
*Review the final policy statement when published in Q1 2026 to understand specific rule changes applicable to your firm's business model
*Assess securitisation impacts
*Evaluate mortgage capital treatment
*Update ECAI mapping processes
*Establish implementation timeline
Key Dates
28 October 2025- PRA published near-final policy statement PS19/25
Q1 2026- PRA intends to publish final policies and rule instruments alongside or shortly after final Basel 3.1 package publication
1 January 2026- Implementation date for certain proposals finalized in PS12/25 (limited scope)
1 January 2027- Implementation date for policies and requirements in PS19/25 (primary implementation date)
PS18/25, published by the PRA on 28 October 2025, retires the "refined methodology" for Pillar 2A capital calculations, replacing it with reliance on the Basel 3.1 Credit Risk Standardised Approach (CR SA) for greater risk sensitivity, transparency, and proportionality. This near-final policy simplifies the Pillar 2A framework, reduces administrative burdens, and aligns with broader Basel 3.1 implementation and the Strong and Simple regime for Small Domestic Deposit Takers (SDDTs), promoting safety, soundness, and competition. It matters because it directly impacts credit risk capital add-ons for affected firms, requiring updates to ICAAP/SREP processes ahead of Basel 3.1 timelines.
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What Changed
Retirement of Refined Methodology: Eliminates supervisory adjustments to Pillar 2A credit risk add-ons based on IRB benchmarking, as Basel 3.1 CR SA better captures risks and reduces gaps between standardised and IRB approaches.
Policy Material Updates:
- Near-final amendments to Statement of Policy (SoP) 5/15 – The PRA’s methodologies for setting Pillar 2 capital.
- Final amendments to Supervisory Statement (SS) 31/15 – The Internal Capital Adequacy Assessment Process (ICAAP) and Supervisor
What You Need To Do
Review and update internal Pillar 2A methodologies, ICAAP/SREP documentation to remove refined methodology reliance and align with Basel 3
Model/calculate potential capital impacts from CR SA changes vs
Prepare for IRRBB/pension risk clarifications in SS31/15 submissions from 1 July 2026; monitor CP12/25 review
Engage PRA supervisors on firm-specific transitions; update reporting (e
Firms may apply changes early in ICAAP from relevant dates (e
Key Dates
28 October 2025- PS18/25 publication with near-final policy and PRA feedback to CP9/24/CP7/24 consultations.
1 July 2026- Effective date for pension obligation risk amendments in SoP5/15 and SS31/15 clarifications (IRRBB changes partially deferred).
Q2 2026- Expected finalisation of CP12/25 Phase 1 proposals (Pillar 2A review, including IRB benchmarking removal).
Basel 3.1 Implementation Date (TBD, aligned with CR SA go-live)- Retirement of refined methodology and related credit/operational risk changes.
January 2026- PS2/26 published as final policy, minor adjustment to SS31/15 para 5.12A.
Compliance Impact
Urgency: High – Firms must act now to recalibrate Pillar 2A capital ahead of Basel 3.1 and 1 July 2026 effective dates, as retirement eliminates adjustments that reduced add-ons for low-risk CR SA firms, potentially increasing capital requirements despite Basel 3.1 offsets. Non-compliance risks supe
SS31/15 is the PRA's foundational supervisory statement establishing expectations for how UK-regulated banks and large investment firms must conduct their Internal Capital Adequacy Assessment Process (ICAAP) and how the PRA will evaluate these assessments through its Supervisory Review and Evaluation Process (SREP). This guidance is critical because it directly determines the capital requirements firms must maintain and establishes the supervisory framework through which the PRA assesses whether firms hold sufficient capital to cover material risks.
What Changed
The supervisory statement establishes several core regulatory expectations:
*ICAAP Requirements**
Firms must assess on an ongoing basis whether they hold sufficient capital to cover all material risks, including interest rate risk in the banking book (IRRBB), market risk, operational risk, concentration risk, group risk, pension obligation risk, and foreign currency lending to unhedged retail and SME borrowers
Firms must implement stress testing and scenario analysis as integral components of c
What You Need To Do
*Immediate Compliance Actions
*Establish ICAAP Framework
*Risk Identification and Assessment
*Stress Testing and Scenario Analysis
Results of stress tests carried out in accordance with CRR requirements for firms using IRB approaches or internal models
Key Dates
29 July 2015- SS31/15 first published, replacing PRA SS5/13 and PRA SS6/13
1 July 2026- Effective date for updates to SS31/15 (as referenced in recent amendments)
Ongoing- Firms must carry out ICAAP on a continuous basis in accordance with PRA ICAA rulesDEADLINE
**PS20/25** represents the second and final phase of the PRA's "Strong and Simple Framework," establishing a significantly simplified capital regime for Small Domestic Deposit Takers (SDDTs) while maintaining their resilience. This near-final policy statement, published on 28 October 2025, fundamentally restructures capital requirements, liquidity rules, and operational frameworks for SDDTs—a critical development for smaller deposit-taking institutions seeking regulatory relief from disproportionate compliance burdens.
What Changed
The simplified capital regime introduces structural changes across all three pillars of capital requirements:
*Pillar 1 (Risk-Weighted Assets)
SDDTs must apply Basel 3.1 standardised approaches for credit risk and operational risk, with specific simplifications.
Due diligence requirements in the standardised approach to credit risk are disapplied for SDDTs.
Counterparty credit risk (CCR) for derivatives and credit valuation adjustment (CVA) risk are disapplied (with minor exceptions).
Market ri
What You Need To Do
*For SDDTs Currently Operating or Considering Entry:
*Notification Decision – Determine whether to enter the SDDT regime and submit notification to the PRA by 31 March 2026 if seeking to benefit from simplified rules
*Policy Review – Conduct comprehensive review of PS20/25, related policy statements (PS18/25, PS19/25, PS8/25, PS14/25), and supporting methodologies (SoP5/25, SS4/25, amendments to SoP2/23)
*Capital Calculation Transition – Prepare systems and processes to transition from current capital calculation methodologies to Basel 3
Removal of CCR and CVA calculations for derivatives
Key Dates
31 March 2026– Deadline for firms wishing to enter the SDDT regime to notify the PRA and benefit from the simplified framework at implementation.DEADLINE
1 January 2027– Implementation date for the simplified capital regime for SDDTs; the Interim Capital Regime will no longer apply.
2026 (specific date TBD)– PRA to make final rules and policy covering the entire Basel 3.1 package once HM Treasury makes commencement regulations to revoke relevant CRR provisions.
2027 (specific date TBD)– PRA to implement restatement of CRR requirements (PS19/25).
PS17/25 establishes the **Matching Adjustment Investment Accelerator (MAIA) framework**, enabling PRA-regulated insurers to regularize and expand their use of matching adjustment (MA) in calculating capital requirements for certain long-duration insurance liabilities. This framework is significant because it provides a structured pathway for firms to optimize capital efficiency while maintaining prudential safeguards through exposure limits, eligibility assessments, and breach remediation mechanisms.
What Changed
The MAIA framework introduces the following regulatory requirements:
*Permission and Eligibility Framework
Firms must obtain explicit MAIA permission** from the PRA to use the accelerator
Permission grants authority to regularize previously non-compliant MA assets and apply MA to new eligible assets within defined parameters
*Exposure Limits
Firms receive fixed monetary exposure limits** calibrated using the Best Estimate of Liabilities (BEL) of the MA portfolio, net of reinsurance, at the tim
What You Need To Do
*Immediate (Q4 2025 - Q1 2026)
*Assess eligibility for MAIA permission by reviewing current MA portfolio and prospective assets
Publication from the Bank, PRA and FCA to firms and financial market infrastructures highlighting observed effective practices of cyber response and recovery capabilities.
The PRA has published LIAC02/25, a consultation on proposed low impact amendments to rules and policy.
AI Analysis
The PRA's LIAC02/25 consultation, published on 16 October 2025, proposes low-impact amendments to its Rulebook and policy materials, including technical fixes, conditional disapplications, and miscellaneous corrections to enhance accuracy and align with prior policies. These changes matter for PRA-regulated firms as they ensure regulatory consistency with minimal operational burden, with most taking effect in late 2025 or early 2026 following the consultation period.
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What Changed
The main proposals include:
Conditional disapplication of PRA General Provisions to implement deference arrangements under the UK-Swiss Berne Financial Services Agreement.
Amendment to Transitional Measure on Technical Provisions (TMTP) Part, Rule 5.2, introducing a new formula for 'Wr' effective 31 December 2025, using existing 'Wq' values without retrospective recalculation.
Amendment to Insurance Special Purpose Vehicle (ISPV) Part, Solvency Requirements Rule 2.2A(3), clarifying the 'no co-mi
What You Need To Do
Submit consultation responses by 13 November 2025 via the PRA's Low Impact Amendments Process page, focusing on proposed disapplications, TMTP formula, ISPV rules, and miscellaneous changes
Review and update internal policies for TMTP calculations to adopt the new 'Wr' formula from 31 December 2025 year-end, without restating priors
Confirm compliance with ISPV 'no co-mingling' clarifications and SS2/25 updates by 23 December 2025
Verify Rulebook references (e
For friendly societies/credit unions
Key Dates
13 November 2025Consultation closes for LIAC02/25 responses.
21 October 2025Effectiveness of Solvency II restatement amendments (from prior consultations).
23 December 2025Effectiveness of ISPV Rule 2.2A(3), TMTP Rule 5.2A(3), minimum fees reduction, and related SS2/25 updates; also LIAF03/25 amendments per industry reports.
19 January 2026Effectiveness of Securitisation Part Rule 2, Article 7 amendment aligning with FSMA revocations.
24 July 2025Effectiveness of certain non-substantive Solvency II fixes (already passed).
Compliance Impact
Urgency: Low – These are explicitly "low impact" technical, typographical, and alignment amendments with no material capital, reporting, or operational shifts expected; many stem from prior consultations (e.g., CP8/25, CP12/23, PS10/25) and avoid retrospective changes. Firms should act promptly on r
PS21/25 implements reforms to PRA remuneration rules for banks, building societies, and PRA-designated investment firms, simplifying Material Risk Taker (MRT) identification, aligning deferral periods with international standards (4 years for non-SMF MRTs and 5 years for SMFs), and enhancing links to individual accountability under the Senior Managers Regime (SMR). These changes matter as they reduce regulatory burden, increase flexibility in bonus structures (e.g., marginal deferral rates and cash payments), and promote competitiveness while maintaining risk alignment, potentially reversing trends toward higher fixed pay.
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What Changed
MRT Identification: Simplified quantitative threshold to the top 0.3% of earners (assessed against risk impact); qualitative criteria unchanged; raised proportionality threshold for disapplying rules from £44,000 variable pay to £660,000 total pay (with variable pay ≤33% of total); reintroduced exemption for MRTs serving <3 months.
Deferral Periods: 4-year minimum for non-SMF MRTs (previously varied); reduced to 5 years for SMFs (from 7 years); aligns with FCA and international practice.
Deferra
What You Need To Do
Review and update MRT identification processes, applying simplified top 0
Revise remuneration policies for deferral (4/5 years, marginal rates), upfront cash flexibility, and instrument expectations; update bonus award calculations
Embed SMR-linked adjustments
For dual-regulated firms
Optional early adoption for specified changes on 2025/unvested awards; document governance for RemCo approvals and board policies
Key Dates
15 October 2025Publication date; some changes (e.g., deferral periods, pro-rata vesting) may apply to ongoing 2025 performance year and unvested prior awards at firm discretion.
16 October 2025Final rules and updated SS2/17 take effect; apply to performance years starting after this date (e.g., mandatory from 1 January 2026 for calendar-year firms).
November 2024Preceding joint consultation (CP16/24/PRA, CP24/23/FCA) closed prior to PS.
Compliance Impact
Urgency: High – Mandatory from performance years post-16 October 2025 (e.g., 2026 for most), with immediate opt-in possible; impacts 2026 bonus cycles, requiring swift policy rewrites amid year-end planning. Matters due to simplified but ownership-heavy MRT processes, SMR-pay linkages raising accoun
PS16/25 is the PRA's policy statement restating firm-facing organisational requirements from the MiFID Org Reg (e.g., outsourcing, record-keeping, risk management, compliance, internal audit, and governance) into the PRA Rulebook, with no material changes, to align with HMT's revocation of the EU regulation under FSMA 2023. This matters because it ensures continuity of prudential oversight for PRA-authorised firms post-revocation, preventing enforcement gaps in systems and controls while adapting provisions (e.g., supervisory function) to UK governance structures.
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What Changed
Restatement of requirements: Provisions from MiFID Org Reg Articles on outsourcing, record-keeping, control procedures, risk management, compliance, internal audit, and governance are transferred verbatim or with minor clarifications into PRA Rulebook parts (e.g., Risk Control).
Supervisory function adjustment: Following consultation feedback, PRA retained Article 25 provisions but substituted "governing body" for "supervisory function" to fit UK firm structures, preserving board-level oversight
What You Need To Do
Review and map existing MiFID Org Reg compliance processes against restated PRA Rulebook provisions (e
Confirm governing body oversight aligns with adapted Article 25 requirements; document any adjustments for UK structures
Update internal references in algorithmic trading governance documents to new rule 2
Conduct gap analysis and training on minor clarifications; prepare for dual FCA/PRA alignment if applicable
Monitor HMT commencement order; if delayed, reassess implementation plans
Key Dates
9 October 2025- PRA publishes PS16/25 with final rules and feedback to CP9/25 consultation.
23 October 2025- New PRA rules and technical standards come into force, coinciding with HMT's anticipated revocation of MiFID Org Reg via commencement order (FCA rules align on same date).
Prior to 23 October 2025- HMT expected to lay second Statutory Instrument revoking remaining MiFID Org Reg provisions; PRA may delay/revoke rules if not made.
Compliance Impact
Urgency: High – Firms must act promptly as rules take effect on 23 October 2025 (past deadline as of current date), with no transition period; non-compliance risks enforcement gaps in core systems/controls post-revocation. Impact is low for substance (restatement only) but requires documentation upd
The PRA Regulatory Digest is for people working in the UK financial services industry and highlights key regulatory news and publications delivered for the month.
PS15/25 introduces **new liquidity risk reporting requirements for major UK insurance firms**, closing data gaps identified during the March 2020 "dash for cash" and September 2022 LDI crisis. The policy mandates four new reporting templates for firms with significant derivatives or securities lending exposure, with implementation deferred to **30 September 2026** to allow adequate preparation time.
What Changed
The PRA's final policy establishes the following regulatory framework:
*New Reporting Templates**
Four new liquidity reporting templates have been introduced to capture previously unavailable data:
Annual committed facilities template
Monthly cash-flow mismatch template (short form)
Monthly cash-flow mismatch template for ring-fenced funds, matching adjustment portfolios, and remaining parts
Additional supervisory reporting requirements
*Scope and Thresholds
Firms are subject to liquidity repo
What You Need To Do
*Immediate Actions (by Q2 2026)
*Threshold Assessment
*RFF Mapping
*System Readiness
*Data Governance
Key Dates
30 September 2025- PRA published PS15/25 (policy statement)
31 December 2025- Original implementation deadline (now superseded)DEADLINE
30 September 2026- **Final implementation date for all liquidity reporting requirements**
First reporting reference date after 30 September 2026- Firms meeting threshold conditions must commence reportingDEADLINE
Three consecutive annual reporting reference dates- Threshold for ceasing reporting once firms fall below thresholds
SS15/16 establishes the PRA's expectations for UK insurance firms using approved internal models to calculate their Solvency Capital Requirement (SCR), requiring them to maintain the ability to calculate SCR using the standard formula and submit standard formula SCR calculations for regulatory monitoring purposes. This guidance is critical because it ensures capital requirements remain reflective of actual firm risks and protects policyholder security by preventing model drift—where internal models diverge from underlying risk realities over time.
What Changed
The supervisory statement introduces several core regulatory expectations:
Internal Model Maintenance Requirement: Firms with approved internal models must maintain the capability to calculate SCR using the standard formula, even if they primarily use internal models for capital calculations.
Standard Formula SCR Reporting: Firms using approved internal models to calculate solo SCR are expected to report standard formula SCR results privately to the PRA on an annual basis.
Model Drift Monitor
What You Need To Do
*Maintain Dual Calculation Capability
*Establish Annual Reporting Process
*Integrate into Risk Management
*Obtain Senior Management Approval
*Maintain Supporting Documentation
Key Dates
25 October 2016- Original SS15/16 publication
31 December 2018- Document updated (referenced in original guidance)
September 2025- Most recent update to SS15/16 published, clarifying expectations for firms with material non-life technical provisions
Four weeks after annual quantitative reporting submission- Deadline for standard formula SCR reportingDEADLINE
30 September 2026- Implementation deadline for liquidity reporting rules (related Solvency II development)DEADLINE
Letter to chief financial officers of selected PRA-regulated deposit-takers which provides thematic feedback from the PRA’s review of written auditor reports received in 2025 covering IFRS 9 expected credit loss accounting (ECL) and accounting for climate risk.
AI Analysis
The PRA's Dear CFO Letter, issued on 30 September 2025 by David Bailey, provides thematic feedback to selected PRA-regulated deposit-takers based on its 2025 review of auditor reports on IFRS 9 expected credit loss (ECL) accounting and climate risk integration. It matters because it highlights persistent supervisory concerns around timely credit risk recognition, model limitations, recovery assumptions, and climate impacts amid economic uncertainty, urging firms to strengthen ECL processes to ensure safety and soundness.
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What Changed
This is not a formal rule change or new regulation but thematic feedback building on prior years, with "areas of focus" for improvement:
Model risk: Elevated due to macroeconomic/geopolitical uncertainty; firms must enhance post-model adjustments (PMAs) for completeness (e.g., affordability risks, sector vulnerabilities), granular monitoring of borrower cohorts/ECL components, and model redevelopment governance.
Recovery strategies: Ongoing risk of historical bias in Loss Given Default (LGD) est
What You Need To Do
Conduct self-assessments against annex "areas of focus" (model risk, recovery, climate) and share with auditors ahead of 2026 reporting
Enhance PMAs
Model improvements
Recovery processes
Climate integration
Key Dates
30 September 2025- PRA issues Dear CFO Letter with thematic feedback.
2025- Auditor reports reviewed by PRA (basis for this feedback).
2026- Next round of written auditor reporting on firms' progress against areas of focus, including data aggregation and securitisation impacts; firms encouraged to self-assess now.
Compliance Impact
Urgency: High – Persistent issues from prior years (e.g., 2024 feedback) indicate elevated model risk in uncertain conditions could lead to PRA scrutiny, auditor findings, or enforcement if unaddressed; 2026 auditor reports will benchmark progress, risking heightened supervision. Matters for prudent
The PRA's CP21/25 proposes deletion of 37 banking regulatory reporting templates—primarily 34 FINREP templates representing approximately one-third of all FINREP collections—as the first phase of its Future Banking Data (FBD) programme. This initiative aims to reduce annual reporting burden by approximately £26 million while maintaining supervisory effectiveness by eliminating duplicative, outdated, or low-value data collections.
What Changed
The PRA proposes the following regulatory deletions:
*FINREP Template Deletions:**
Permanent deletion of 34 whole FINREP reporting templates (approximately one-third of all FINREP collections)
Consolidation of remaining FINREP requirements within a single section of the PRA Rulebook
Clarification of scoping conditions where current provisions are unclear, duplicative, or inconsistently applied
Alignment of reporting remittance dates for FINREP reporting
*Other Template Deletions:**
Two COREP t
What You Need To Do
*Cease reporting on the 37 deleted templates effective 31 December 2025
*Update internal systems and processes to remove validation rules and submission workflows for deleted templates
*Revise compliance calendars to reflect aligned FINREP reporting remittance dates
*Review Pillar 3 disclosure obligations to identify any continued requirements based on deleted FINREP templates and assess whether disclosure obligations remain despite template deletion
*Implement rulebook changes reflecting consolidation of FINREP scoping provisions into the PRA Rulebook
Key Dates
September 2025- CP21/25 consultation paper published
31 December 2025- Proposed implementation date to avoid firms submitting 2025 Q4 data for deleted templates
8 December 2025- PS27/25 (Policy Statement) published, confirming final policy
CP20/25 is a PRA consultation paper published on 16 September 2025 that proposes targeted updates to the regulatory framework governing third-country insurance branches operating in the UK. The consultation addresses inconsistencies introduced during the Solvency II review, clarifies supervisory expectations, and increases the subsidiarisation threshold—matters that directly affect the operational and compliance costs of non-UK insurers seeking to maintain branch operations rather than establish subsidiaries in the UK market.
What Changed
The consultation proposes four primary regulatory modifications:
*Subsidiarisation Threshold Increase
The PRA proposes raising the FSCS liability threshold above which third-country branches must establish a UK subsidiary from £500 million to £600 million**. The PRA attributes this increase to inflation rather than organic growth, aiming to prevent branches from artificially approaching the current threshold and incurring unnecessary subsidiarisation costs.
*ORSA Reporting Clarification
Curren
What You Need To Do
*Threshold Assessment
*Reporting Requirement Review
*Quantitative Metrics Compliance
*Three-Year Notification Obligation
*Asset Holding Verification
Key Dates
16 September 2025- CP20/25 published by the PRA
16 December 2025- Consultation response deadlineDEADLINE
H1 2026- Statement of Policy (SoP) expected to be published; subsidiarisation threshold update anticipated upon SoP publication
31 December 2026- Planned implementation date for rulebook changes