PRA Updates 2026

🇬🇧 PRA Policy high

March 26th 2026

PS10/26 – Amendments to Resolution Assessment threshold and Recovery Plans review frequency

Policy statement 10/26

AI Analysis

PS10/26 finalizes PRA proposals to raise the Resolution Assessment threshold from £50 billion to £100 billion in retail deposits and reduce recovery plan review frequency for Small Domestic Deposit Takers (SDDTs) from annually to biennially, enhancing proportionality in resolution and recovery frameworks post-financial crisis. These changes reduce regulatory burden on smaller firms while maintaining safety and soundness, directly supporting PRA objectives of competitiveness and growth. Compliance teams must assess scope changes immediately to align reporting and planning cycles.

What Changed

Resolution Assessment Threshold: Increased from £50 billion to £100 billion in retail deposits, limiting reporting and disclosure requirements under the Resolution Assessment Part of the PRA Rulebook to only the largest firms posing systemic risks. Recovery Plans Review Frequency: For SDDTs and SDDT consolidation entities, reduced from at least annually to at least every two years, aiming for higher quality plans with less frequent reviews. Rulebook and Guidance Updates: Amendments to Resolution Assessment Part (Appendix 2), Recovery Plans Part (Appendix 3), and Supervisory Statement SS9/17 –...

What You Need To Do

Scope Assessment
Recovery Plans
Reporting/Disclosure

Key Dates

1 April 2026 - Effective date for PS10/26 changes, including new £100bn threshold and biennial recovery plan reviews for SDDTs .

2 October 2026 - Expected submission date for first Resolution Assessment reports for in-scope firms (as previously communicated by PRA) .

11 June 2027 - Expected publication date for first disclosures under amended threshold .

Compliance Impact

Urgency: High – Effective 1 April 2026 (imminent from March 2026), with first reports due 2 October 2026; firms between £50-100bn retail deposits gain immediate burden relief (exiting scope), while largest firms face no new burdens but must confirm ongoing compliance. Matters due to proportionality aligning with PRA growth objectives, reducing costs for mid-tier banks/building societies amid economic pressures, but requires swift deposit recalibration to avoid inadvertent non-compliance.

References

Sectors:

Prudential / Capital Requirements Reporting & Disclosure

Topics:

Bank

Banking & Credit Capital Markets & Trading Payments & E-Money

🇬🇧 PRA Policy high

March 26th 2026

PS11/26 – Disclosure: resolvability resources, capital distribution constraints and the basis for firm Pillar 3 disclosure

Policy statement 11/26

AI Analysis

PS11/26 finalizes PRA rules enhancing Pillar 3 disclosures on resolvability resources (MREL), capital distribution constraints (CDCs), and disclosure basis for UK banks and building societies. It matters because it standardizes information to boost market discipline, user comparability, and confidence in orderly resolution, directly impacting financial stability and compliance reporting. No substantive changes from CP16/25 consultation, with minor clarifications only.

What Changed

Standardized MREL disclosure templates: Replaces free-form disclosures with four new templates aligned to Basel BCBS TLAC formats (adapted for UK), expanding scope to more firms for consistency on MREL adequacy. Qualitative CDC narrative: Added to UK CC1 template for firms subject to CDCs, enabling market assessment of restriction impacts; removes obsolete Systemic Risk Buffer (SRB) disclosure post-O-SII buffer replacement. Disclosure basis statement: Firms must specify their Pillar 3 regime (e.g., resolution entity, O-SII, large institution), frequency, and details like reference date,...

What You Need To Do

Update Pillar 3 processes to use new MREL templates (Annex XXVII instructions), UK CC1 with CDC narrative, and basis statement (e
For CDC-subject firms
Ensure semi-annual disclosure of key metrics (Article 447 points a-g) where required
Integrate into consolidated reporting for UK parents; test templates/instructions from appendices
Review for alignment with broader CRR changes (e

Key Dates

17 March 2026 - PS11/26 and accompanying rule instruments (e.g., Disclosure (CRR) Instrument 2026) published.

1 January 2027 - Policy effective date; rules apply from this date.

H1 2027 - First disclosures under new policy published, covering period ending **31 December 2026** (annual/semi-annual as applicable).

Compliance Impact

Urgency: High – Effective 1 January 2027 requires immediate template/system updates for H1 2027 disclosures (year-end 2026 data), with standardized formats limiting flexibility and raising non-compliance risks to market discipline objectives. Impacts reporting teams, resolution planning, and investor relations; proportional design minimizes burden but demands proactive gap analysis given no transition grace beyond effective date.

References

Sectors:

Topics:

Prudential / Capital Requirements Reporting & Disclosure

BankBroker DealerAll Firms

🇬🇧 PRA Policy medium

March 26th 2026

PS9/26 – Resolution planning: Amendments to MREL reporting templates

Policy statement 9/26

AI Analysis

PS9/26 finalizes targeted amendments to MREL reporting templates, including changes to MRL001 and MRL003 data elements and the deletion of MRL002, reducing reporting burdens while maintaining resolution planning oversight. This matters for compliance teams as it streamlines processes under the PRA's Future Banking Data programme, with implementation from 1 January 2027, enabling firms to reallocate resources efficiently.

What Changed

Amendments to data elements in the MREL resources template (MRL001) and MREL debt template (MRL003), with full deletion of the MREL resources forecast template (MRL002). Consequential updates to reporting instructions (Appendix 2) and Supervisory Statement SS19/13 (Appendix 3), including relocation of instrument scope descriptions to reporting instructions for clarity. No changes to quarterly reporting frequency for MRL001/MRL003, despite industry requests for semi-annual alignment, to ensure monitoring of loss-absorbing capacity. PRA to publish updated reporting taxonomy shortly.

What You Need To Do

Review and update internal reporting systems to incorporate revised MRL001/MRL003 templates and deleted MRL002 by 1 January 2027
Implement updated reporting instructions and SS19/13 amendments, including clarified scope of instruments in MRL templates
Prepare for Q4 2026 data submission in February 2027 using new taxonomy (to be published shortly by PRA)
For firms with deleted COREP13 templates, cease submissions from April 2026 cycle
Conduct gap analysis against SS19/13 changes and test processes for quarterly MREL reporting continuity

Key Dates

1 January 2027 - Revised MRL001 and MRL003 templates effective; first submissions of 2026 Q4 data (ending 31 December 2026) due in **February 2027**. DEADLINE

1 April 2026 - Partial revocation of UKTS 2018/1624 (COREP13), deleting certain templates ahead of April 2026 cycle for period ending 31 December 2025.

1 April 2026 - PS10/26 effective (related: Resolution Assessment threshold amendments, reports due 2 October 2026). DEADLINE

1 January 2027 - PS11/26 effective (related: disclosures from 2027 H1 for period ending 31 December 2026).

Compliance Impact

Urgency: Medium – Changes reduce burden (net simplification, ~25% per industry feedback) but require system updates before 1 January 2027 submissions; non-compliance risks resolution planning scrutiny, though lead time mitigates immediate pressure. Matters for maintaining accurate MREL monitoring amid PRA's FBD efficiency drive.

References

Sectors:

Prudential / Capital Requirements Reporting & Disclosure

Topics:

Bank

Banking & Credit Insurance & Pensions Capital Markets & Trading

🇬🇧 PRA Policy high

March 18th 2026

PS7/26 – Operational resilience: Operational incident and third-party reporting

Policy statement 7/26

AI Analysis

PS7/26 finalizes PRA rules for standardized reporting of operational incidents and material third-party (MTP) arrangements, responding to CP17/24 consultation feedback by reducing firm burden through simplified templates and exclusions. This matters for compliance professionals as it enhances PRA oversight of operational resilience risks amid rising threats and third-party reliance, aligning with international standards like DORA and FSB FIRE while supporting identification of critical third parties (CTPs).

What Changed

MTP Reporting: Amended notification rule for clarity; scope excludes credit unions with <£50m assets and all third-country branches; separated register and notification templates with reduced data fields; single submission platform (FCA Connect). Operational Incident Reporting: Merged three-phased reports (initial, interim, final) into one simplified, aligned template across PRA/FCA/Bank; removed fields, made more optional; clarified thresholds (e.g., safety/soundness, financial stability, policyholder protection for PRA), timing, and factors like contagion/reputation via SS1/26. Guidance...

What You Need To Do

Identify and notify MTP arrangements via FCA Connect (excluding exemptions); maintain annual register with reduced fields
Monitor/assess operational incidents against clarified thresholds (e
Update policies per SS1/26 (thresholds) and SS2/21 (MTP identification)
Align reporting with PRA/FCA/Bank templates; use data for resilience prioritization
For insurers

Key Dates

December 2024 - CP17/24 consultation published.

H1 2026 - Final PRA/FCA rules on operational incident and third-party reporting effective (per industry analysis).

30 working days post-incident resolution - Submit final incident report update (extendable to 60 working days in complex cases).

Annual - MTP register reporting (exact date not specified; aligns with notifications).

March 2026 implies rules near/applicable now; implementation likely immediate or phased per PS.)

Compliance Impact

Urgency: High - Mandates new reporting infrastructure and processes amid rising operational threats; non-compliance risks supervisory action on resilience vulnerabilities. Reduced burden from CP mitigates costs, but timely implementation critical for PRA oversight and CTP identification; benefits (e.g., thematic analysis) outweigh costs per PRA.

References

Sectors:

Topics:

Operational Resilience / Outsourcing Reporting & Disclosure Technology & Cyber

BankInsuranceAll Firms

Banking & Credit Insurance & Pensions Capital Markets & Trading

🇬🇧 PRA Guidance high

March 18th 2026

SS1/26 – Operational resilience: Incident reporting

Supervisory statement 1/26

AI Analysis

SS1/26 outlines the PRA's expectations for firms to report operational incidents via a structured three-phase process (initial, intermediate, final) as mandated in the PRA Rulebook's Regulatory Reporting Part, Chapter 24, to enhance UK financial sector resilience by capturing incidents risking firm safety, policyholder protection, or stability. This matters because it standardizes reporting, enabling timely PRA oversight and reducing inconsistencies in incident data collection across regulated entities.

What Changed

Introduces clear reporting thresholds in Regulatory Reporting Rule 24.2: Firms must report if an incident poses risks to UK financial stability, firm safety/soundness, or (for insurers) policyholder protection; factors include operational/financial contagion, service disruptions, data loss to external users, or regulatory/media attention. Mandates a phased reporting approach (Rule 24.1-24.4): Initial report as soon as practicable (expected within 24 hours of threshold determination); intermediate updates for significant changes (e.g., impact escalation, BCP activation, resolution); final...

What You Need To Do

Assess incidents against PRA thresholds (e
Submit phased reports using specified fields
Maintain processes for prompt classification, data gathering, and submission while prioritizing resolution; continue ad-hoc supervisory notifications if needed
Review internal policies to align severity ratings with PRA thresholds; document assessments
For critical third-party (CTP) incidents, both firms and CTPs report uniquely

Key Dates

18 March 2026 - Publication date of SS1/26.

18 March 2027 - Effective date; firms must comply with reporting requirements. DEADLINE

Within 24 hours - Expected submission of initial phase report after determining threshold met (as soon as practicable).

Each significant change - Intermediate phase update(s), including at resolution.

Within 30 working days of resolution - Final phase report (extendable to 60 working days if impracticable).

Compliance Impact

Urgency: High – With effectiveness just over one year away (18 March 2027), firms must urgently map incident management frameworks to new thresholds/phases, update policies, train staff, and test reporting (e.g., via simulations), as non-compliance risks enforcement under PRA rules and heightened scrutiny on resilience amid rising cyber/operational threats. This elevates operational resilience from preparation (e.g., IMT testing by March 2025) to active reporting, demanding integrated tech/governance upgrades.

References

Sectors:

Topics:

Operational Resilience / Outsourcing Reporting & Disclosure

BankInsuranceAll Firms

🇬🇧 PRA Consultation high

March 17th 2026

CP5/26 – Modernising the liquidity policy framework

Consultation paper 5/26

AI Analysis

CP5/26 is a PRA consultation paper proposing updates to the liquidity policy framework to address modern risks from digital banking, payments, and technology that can amplify liquidity stresses. It matters because it strengthens firms' resilience by emphasizing liquidity resource composition, monetisation risk, and short-term stress scenarios, ensuring firms can meet outflows in acute crises.

Sectors:

Topics:

Bank

Banking & Credit Capital Markets & Trading

🇬🇧 PRA Policy high

March 5th 2026

PS6/26 – Recognised exchanges policy and transfer of main indices

Policy statement 6/26

AI Analysis

PS6/26 finalizes the PRA's policy on recognized exchanges (REs) under Article 4(1)(72)(c) of the UK CRR, shifting responsibility to firms for assessing exchange and asset liquidity conditions while restating main indices in the PRA Rulebook and revoking SS20/13. This matters for PRA-regulated firms as it enables more dynamic, risk-sensitive capital treatments for traded assets, potentially expanding eligible REs and supporting competitiveness without PRA pre-approval.

Sectors:

Topics:

Bank

Banking & Credit Insurance & Pensions

🇬🇧 PRA News medium

March 2nd 2026

PRA Regulatory Digest – February 2026

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.

Sectors:

Topics:

Prudential / Capital Requirements Reporting & Disclosure

BankInsurance

🇬🇧 PRA News medium

February 27th 2026

Prudential Regulation Authority statement on the life insurance stress test in 2028

This statement provides an early indication to industry of the Prudential Regulation Authority’s (PRA) intent to launch the next Life Insurance Stress Test (LIST) exercise in January 2028.

Sectors:

Topics:

Insurance

🇬🇧 PRA Consultation medium

February 25th 2026

CP4/26 – UK Solvency II Own Funds: Updates and fixes to rules and expectations

Consultation paper 4/26

AI Analysis

CP4/26 proposes targeted amendments to UK Solvency II own funds rules in the PRA Rulebook, addressing inconsistencies, clarifying requirements, and restating EU guidelines for better accessibility. These updates matter as they reduce regulatory burden, enhance clarity, and align rules with market practices, supporting PRA objectives of firm safety, policyholder protection, and competitiveness without introducing new risks.

What Changed

Amendments to prior permission requirements for repaying or redeeming Tier 1 and Tier 3 own funds instruments, clarifying application to items classified under own funds permissions. Clarification that Tier 2 basic own funds items can cover 20% of the Minimum Capital Requirement (MCR), while Tier 2 Ancillary Own Funds cannot. Requirement that both minimum maturity date and first contractual opportunity to redeem must be met for Tier 1 and Tier 2 basic own funds classification. Correction to reconciliation reserve calculation to avoid canceling eligible own funds increases from classification...

What You Need To Do

Review and respond to consultation by 24 April 2026 via email to CP4_26@bankofengland
Assess current own funds instruments against proposed clarifications (e
Evaluate reconciliation reserve calculations for potential adjustments post-permission grants
Engage PRA on concurrent transactions (e
Prepare for Rulebook updates by mapping impacts to Own Funds, Reporting, Group Supervision, Glossary, and SCR Standard Formula parts

Key Dates

24 April 2026 - Consultation response deadline. DEADLINE

2026 H2 - Publication of dedicated policy statement (PS) with effective date for remaining changes.

Compliance Impact

Urgency: Medium – Proposals are refinements and clarifications rather than new burdens, with modest impacts focused on error corrections and alignment with practices; however, they affect core own funds calculations critical for solvency, requiring review before H2 2026 implementation to avoid misclassifications or PRA engagement delays.

References

Sectors:

Topics:

Insurance

Banking & Credit Consumer Credit Mortgage & Lending

🇬🇧 PRA Policy high

February 20th 2026

PS5/26 – Credit Union Service Organisations

Policy statement 5/26

AI Analysis

PRA Policy Statement PS5/26 finalizes rules permitting UK credit unions to invest in Credit Union Service Organisations (CUSOs), expanding from the CP13/25 proposals to foster innovation, collaboration, and growth while managing prudential risks through safeguards like due diligence and investment caps. This matters as it enables credit unions—often smaller mutuals—to access shared services (e.g., HR, IT, compliance) via CUSOs, leveling the playing field against larger competitors and supporting the PRA's safety/soundness and competitiveness objectives.

What Changed

Investment permission and cap increase: Credit unions can now invest in CUSOs using own capital, with the cap raised from 5% to 7.5% of total capital across all CUSOs (clarifications added on practical application, e.g., aggregation). Expanded CUSO scope: CUSOs can now serve other UK-regulated mutuals (with Part 4A permission) beyond just credit unions; partnerships with non-credit unions permitted as owners, subject to safeguards. Supervisory expectations in SS2/23: New chapter requires due diligence, risk analysis, limited liability to investment amount, legal/operational separation,...

What You Need To Do

Review and update policies
Ensure structural safeguards
Governance alignment
Implementation planning
Reporting/oversight

Key Dates

24 October 2025 - Consultation response deadline for CP13/25. DEADLINE

20 February 2026 - Publication date of PS5/26 (final policy).

~20 August 2026 - Implementation deadline for SS2/23 CUSO expectations (six months from PS5/26 publication). DEADLINE

Compliance Impact

Urgency: High – Credit unions eyeing CUSOs for growth (e.g., shared services) must act promptly within the six-month window to avoid supervisory breaches, as this expands opportunities but introduces new prudential risks (e.g., ownership misalignment, capital exposure). Non-compliance risks heightened PRA scrutiny, especially post-PS26/25 mutual sector review; benefits justify costs only for opt-in firms, but proactive preparation ensures safety/soundness.

References

Sectors:

Topics:

Prudential / Capital Requirements Operational Resilience / Outsourcing Authorisation & Licensing

BankFintechAll Firms

Banking & Credit Capital Markets & Trading Investment Management

🇬🇧 PRA Consultation high

February 19th 2026

CP3/26 – PRA rule changes to accommodate HM Treasury’s Overseas Prudential Requirements Regime

Consultation paper 3/26

AI Analysis

The PRA's CP3/26 proposes rule amendments to align its Rulebook with HM Treasury's (HMT) Overseas Prudential Requirements Regime (OPRR), which restates and modifies existing CRR equivalence provisions for treating overseas entities' exposures as preferential "exposures to institutions." This matters for **PRA-authorised firms** as it clarifies capital treatment for cross-border exposures, reduces interpretive burdens, and ensures consistency post-Brexit, advancing the PRA's safety and soundness objective while facilitating HMT designations.

What Changed

Credit Risk Standardised Approach (SA): Exposures to overseas credit institutions, investment firms, or exchanges treated as "exposures to institutions" only if from UK or HMT-designated OPRR jurisdictions; deletes CRR Article 119(5) for investment firms under Part 9C rules. IRB Approach: Preserves CRR Article 107(3) effect by aligning exposure class allocation with SA's updated "exposures to institutions" concept. Large Exposures: Amends Rule 1.3 definition of "institution" to limit preferential treatment to UK or OPRR-designated overseas entities. General Scope: Applies changes across PRA...

What You Need To Do

Review and respond to consultation by 2 April 2026, indicating consent for name/organisation publication and any confidentiality claims
Assess current exposures to overseas institutions/exchanges against proposed OPRR criteria; model impacts on capital requirements under SA, IRB, and large exposures rules
Update internal policies on exposure classification once final rules published; monitor HMT OPRR designations for affected jurisdictions
Indicate response as individual or organisational; personal data handled per Bank of England privacy notice

Key Dates

Thursday 2 April 2026 - Consultation response deadline; submit to CP3_26@bankofengland.co.uk or PRA at 20 Moorgate, London EC2R 6DA. DEADLINE

Compliance Impact

Urgency: High – Firms must engage promptly on consultation (deadline ~10 weeks from publication) to influence outcomes; changes clarify but could increase capital for non-designated overseas exposures, impacting safety/soundness and competitiveness. Failure to adapt risks non-compliance with updated Rulebook and higher prudential burdens.

References

Sectors:

Topics:

Prudential / Capital Requirements Reporting & Disclosure

BankAll Firms

Banking & Credit Capital Markets & Trading Insurance & Pensions

🇬🇧 PRA Consultation high

February 17th 2026

CP2/26 – Reforms to securitisation requirements

Consultation paper 2/26

AI Analysis

CP2/26 is a PRA consultation paper proposing targeted reforms to UK securitisation rules to reduce prescriptiveness and burden while maintaining prudential soundness, building on recent CRR restatements. It matters for compliance professionals as it streamlines due diligence, risk retention, disclosures, and capital treatments, potentially lowering costs for PRA-authorised firms in the securitisation market amid Basel 3.1 implementation. These changes aim to enhance proportionality without compromising investor protection or oversight.

What Changed

The proposals amend PRA rules and supervisory guidance in the Securitisation Part of the PRA Rulebook, including: Due diligence: Remove prescriptive verification of credit-granting criteria (Chapter 2 Article 9), risk retention (Chapter 2 Article 6 and Chapter 4), STS criteria, specific information availability, ongoing monitoring lists, stress testing, internal reporting to management, and demonstration of understanding to PRA; replace with proportionate consideration of credit-granting standards. Risk retention: Introduce a new combined modality merging two existing ones. Market disclosure...

What You Need To Do

Review and respond
Gap analysis
Coordinate with FCA
Policy updates
Monitor legislation

Key Dates

18 May 2026 - Consultation response deadline. DEADLINE

1 January 2027 - Expected implementation aligning with Basel 3.1 and CRR restatement (PS3/26), with transitional arrangements to 2030.

Post-SI (TBD) - Changes to repository requirements effective upon HM Treasury Statutory Instrument amending UK Securitisation Regulation 2024.

1 January 2026 - Related CRR/Solvency II restatement (PS12/25) already effective, preserving core securitisation requirements.

Compliance Impact

Urgency: High – Proposals reduce burden (e.g., less prescriptive due diligence, streamlined disclosures) but require immediate review ahead of 18 May 2026 deadline and 1 January 2027 implementation, aligning with Basel 3.1. Non-response risks misaligned systems during CRR restatement transition; benefits include cost savings and proportionality, but firms must validate ongoing compliance with retained prudential standards.

References

Sectors:

Topics:

Prudential / Capital Requirements Reporting & Disclosure

BankInsuranceAll Firms

🇬🇧 PRA Consultation medium

February 4th 2026

DP1/26 – Future banking data

Discussion paper 1/26

AI Analysis

The PRA's DP1/26 outlines its Future Banking Data (FBD) programme, reviewing strategic regulatory reporting for banks to reduce costs, enhance data quality, timeliness, and relevance, while aligning with its secondary competitiveness and growth objective. This discussion paper seeks industry feedback on pragmatic, incremental reforms to reporting templates, processes, and principles, balancing supervisory needs with proportionality. It matters for compliance teams as it signals potential simplifications in data submissions, but requires proactive engagement to influence outcomes and prepare for evolving requirements.

Sectors:

Prudential / Capital Requirements Reporting & Disclosure

Topics:

Bank

Banking & Credit Insurance & Pensions

🇬🇧 PRA News high

February 2nd 2026

PRA Regulatory Digest - January 2026

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.

Sectors:

Topics:

Prudential / Capital Requirements Reporting & Disclosure

BankInsurance

Banking & Credit Capital Markets & Trading Investment Management

🇬🇧 PRA Policy high

January 20th 2026

PS1/26 – Implementation of Basel 3.1: Final rules

Policy statement 1/26

AI Analysis

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.

Action Required

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.

Sectors:

Topics:

Prudential / Capital Requirements Reporting & Disclosure Senior Managers / Governance

BankBroker DealerAsset Manager

🇬🇧 PRA Enforcement high

January 20th 2026

PS2/26 – Retiring the refined methodology to Pillar 2A – final

Policy Statement 2/26

AI Analysis

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.

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 SDDTs reflecting no need for Interim Capital Regime (ICR). No further changes from near-final:...

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

2024 CP9/24 consultation on streamlining Pillar 2A, including proposal to retire refined methodology.

28 October 2025 PS18/25 near-final policy published.

20 January 2026 PS2/26 final policy published.

1 January 2027 Effective 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 during SREP; benefits include workload simplification, but SA-only firms must validate no undue conservatism gaps versus IRB peers.

References

Action Required

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.

Sectors:

Topics:

Bank

Banking & Credit Capital Markets & Trading Investment Management

🇬🇧 PRA Policy high

January 20th 2026

PS3/26 – Restatement of CRR requirements – 2027 implementation – final

Policy statement 3/26

AI Analysis

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.

Action Required

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.

Sectors:

Topics:

Prudential / Capital Requirements Reporting & Disclosure Authorisation & Licensing

BankBroker DealerAsset Manager

🇬🇧 PRA Policy high

January 20th 2026

PS4/26 – The Strong and Simple Framework: The simplified capital regime for Small Domestic Deposit Takers (SDDTs) – final

Policy statement 4/26

AI Analysis

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 Deposit Ratio (RDR) measure.

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

Compliance Impact

Urgency: HIGH

References

Action Required

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.

Sectors:

Prudential / Capital Requirements Reporting & Disclosure Authorisation & Licensing

Topics:

Bank

🇬🇧 PRA News medium

January 15th 2026

Letter from Gareth Truran and Shoib Khan – Insurance Supervision: 2026 priorities

Letter to Chief Executive Officers of PRA-regulated Insurance firms

Sectors:

Prudential / Capital Requirements Operational Resilience / Outsourcing

Topics:

Insurance

Banking & Credit Investment Management Wealth & Private Banking

🇬🇧 PRA News medium

January 15th 2026

Letter from Rebecca Jackson and Alison Scott – International Banks Supervision: 2026 priorities

Letter to Chief Executive Officers of PRA regulated international banks active in the UK

Sectors:

Topics:

Prudential / Capital Requirements Operational Resilience / Outsourcing Senior Managers / Governance

BankWealth Manager

🇬🇧 PRA News medium

January 15th 2026

Letter from Charlotte Gerken and Laura Wallis – UK Deposit Takers Supervision: 2026 priorities

Letter to Chief Executive Officers of PRA regulated UK deposit takers

Sectors:

Prudential / Capital Requirements Operational Resilience / Outsourcing

Topics:

Bank

Banking & Credit Insurance & Pensions Investment Management

🇬🇧 PRA Consultation high

January 13th 2026

CP1/26 – Financial Services Compensation Scheme – Management Expenses Levy Limit (MELL) 2026/27

Consultation paper 1/26

AI Analysis

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.

Sectors:

Topics:

Prudential / Capital Requirements Authorisation & Licensing Consumer Protection / Conduct

BankInsuranceAsset Manager

Banking & Credit Investment Management Wealth & Private Banking

🇬🇧 PRA News

January 7th 2026

Future Banking Data: November CFO Roundtable: summary

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).

Sectors:

Topics:

Prudential / Capital Requirements Reporting & Disclosure Operational Resilience / Outsourcing

BankAsset ManagerWealth Manager

Banking & Credit Investment Management Wealth & Private Banking

🇬🇧 PRA News low

January 6th 2026

PRA Regulatory Digest - December 2025

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.

Sectors:

Topics:

Prudential / Capital Requirements Operational Resilience / Outsourcing Reporting & Disclosure

BankAsset ManagerWealth Manager

🇬🇧 PRA News medium

January 2nd 2026

Berne Financial Services Agreement (BFSA) Operational Direction and Guidelines for UK Insurers’ Section IV Notifications

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.

Effective Date: 1 January 2026

Sectors:

Prudential / Capital Requirements Authorisation & Licensing

Topics:

Insurance