Prudential / Capital Requirements

What Changed

• - The PRA finalises amendments to the Reporting Pillar 2 Part of the PRA Rulebook, including updated Pillar 2 data items (FSA072–FSA076 and FSA081) and an updated Pillar 2 reporting schedule, with...
• The PRA issues an updated Statement of Policy (SoP) 5/15 – The PRA’s methodologies for setting Pillar 2 capital, providing revised methodologies across credit, operational, pension obligation, market...
• The PRA issues an updated SoP 5/25 – The PRA’s methodologies for setting Pillar 2 capital for Small Domestic Deposit Takers (SDDTs), tailoring Pillar 2A approaches and expectations for SDDTs.
• The PRA updates Supervisory Statement (SS) 31/15 – ICAAP and SREP, clarifying expectations on how firms should assess, document and justify Pillar 2A capital in ICAAPs, including how to reflect...
• The PRA updates SS 4/25 – ICAAP and SREP for SDDTs, setting proportionate ICAAP expectations and aligning SDDT guidance with the revised Pillar 2A framework.

Suggested Considerations

• Map your firm’s current Pillar 2A capital framework against the updated SoP 5/15 and, where applicable, SoP 5/25 to identify methodology changes across credit, operational, pension, market and counterparty credit risk.
• Update ICAAP methodologies, models and documentation to reflect revised PRA expectations, including new or enhanced use of credit risk and operational risk scenarios and any updated calibration standards.
• Review and, where necessary, redesign ICAAP governance (board oversight, senior management ownership, model risk and validation frameworks) to ensure that new scenario‑driven and systematic Pillar 2A methodologies are subject to appropriate challenge and approval.
• For firms with material sovereign, central bank, regional government or unconditionally cancellable retail exposures, implement the new systematic Pillar 2A credit risk methodologies and assess the impact on capital requirements and risk‑weighted exposure allocation.
• For firms with significant operational risk, enhance scenario analysis frameworks to capture low‑frequency, high‑severity loss events at the PRA’s expected soundness level, and embed these outputs into ICAAP capital quantification.

Key Dates

References

• [1] finreg.aoshearman.com/PRA-Phase-1-of-Pillar-2A-review
• [2] addleshawgoddard.com/en/insights/insights-briefings/2025/...
• [3] bankofengland.co.uk/prudential-regulation/publication/202...
• [4] deloitte.com/uk/en/blogs/ecrs/the-pra-pillar-2a-framework...
• [5] finreg-e.com/pillar-2a-reform-pra-compliance-finrege/
• [6] afme.eu/media/runaekaf/250930-afme-response-to-pra-cp-122...
• [7] ukfinance.org.uk/policy-and-guidance/consultation-respons...

What Changed

• - The PRA has finalised new and restated PRA Rulebook Glossary definitions that replace the CRR definitions previously found in Articles 4, 4A, 4B and 5 for PRA Rulebook purposes.
• The PRA has made consequential amendments across other Parts of the PRA Rulebook to align internal cross-references and terminology with the new glossary structure.
• The PRA has updated Supervisory Statement SS15/13 – Groups to reflect the transfer of CRR definitions into the PRA Rulebook framework.
• The PRA has stated that the vast majority of definitions are restated without substantive policy change, but some definitions were clarified for drafting consistency and readability.
• HM Treasury has set the legislative timetable so that the relevant CRR Articles 4–5 will be revoked from 1 January 2027, while the statutory restatement of selected definitions was made in April 2026.

Suggested Considerations

• Review all internal policies, manuals, and regulatory interpretation documents that currently cite CRR Articles 4, 4A, 4B, or 5 and replace those references with the corresponding PRA Rulebook Glossary definitions.
• Update capital adequacy, prudential reporting, and risk management systems to use the new PRA Rulebook terminology where definitions have moved from the CRR text.
• Reconcile group supervision materials, governance papers, and consolidation analyses against the revised SS15/13 wording to ensure group structures are assessed using the updated definitions.
• Map every affected business line and legal entity to determine which Rulebook Parts and counterparties rely on the transferred CRR definitions.
• Test template agreements, customer disclosures, and internal controls for terminology drift where contractual drafting depends on CRR-defined concepts.

Key Dates

References

• [1] finreg.aoshearman.com/uk-pra-final-policy-on-restatement-...
• [2] bankofengland.co.uk/prudential-regulation/publication/202...
• [3] cms.law/en/gbr/regulatory-news/pra-cp19-25-crr-definition...
• [4] prarulebook.co.uk/legal-instruments?subchapter=6518f952dc...
• [5] bankofengland.co.uk/prudential-regulation/publication/202...
• [6] prarulebook.co.uk/legal-instruments?rule=63da81b30a81496b...
• [7] prarulebook.co.uk

What Changed

• - The PRA confirms an increase in the third‑country branch subsidiarisation threshold for liabilities covered by the Financial Services Compensation Scheme (FSCS) from £500 million to £600 million,...
• Third‑country branch undertakings are now explicitly required to notify the PRA where projections show their FSCS‑covered liabilities may exceed the £600 million subsidiarisation threshold within a...
• The PRA embeds in the Rulebook new quantitative thresholds for regulatory reporting, replacing the existing modification by consent (MbC) under Solvency II Reporting 2.2(1) for third‑country...
• Under the new regime, only branches (excluding pure reinsurance branches) with at least £1 billion gross written premiums or £2 billion in branch provisions (based on the prior year’s annual...
• The PRA discontinues quarterly reporting for certain non‑life claims templates and reinstates two annual reporting templates (IR.19.01.01 – non‑life insurance claims and IR.20.01.01 – development of...

Suggested Considerations

• Assess current and projected FSCS‑covered UK branch liabilities against the new £600 million subsidiarisation threshold and implement or update a robust three‑year forecasting process to identify potential threshold breaches.
• Update internal PRA notification procedures and early‑warning triggers so that the branch informs the PRA promptly if forecasts show FSCS‑covered liabilities could exceed the £600 million threshold within three years.
• For branches approaching or exceeding the new threshold, initiate or refresh internal structural options analysis (branch vs subsidiary), including timeline, capital, governance, and operational impacts, and prepare for early engagement with the PRA on subsidiarisation expectations.
• Map gross written premiums and branch provisions against the new £1 billion GWP and £2 billion provisions reporting thresholds and determine whether the branch will be subject to the full or reduced suite of third‑country branch regulatory reporting templates from 31 December 2026.
• Redesign regulatory reporting processes, systems, and controls to align with the new reporting perimeter, including identifying which templates will be required, adjusting data capture, and ensuring capacity to produce reinstated templates IR.19.01.01 and IR.20.01.01 on an annual basis.

Key Dates

References

• [1] pwc.co.uk/industries/financial-services/understanding-reg...
• [2] hfw.com/insights/pra-consults-on-proposals-for-third-coun...
• [3] bankofengland.co.uk/prudential-regulation/publication/202...
• [4] bankofengland.co.uk/prudential-regulation/publication/202...
• [5] skadden.com/insights/publications/2024/01/chapter-3-cross...
• [6] centralbank.ie/docs/default-source/regulation/industry-ma...
• [7] eiopa.europa.eu/system/files/2019-06/gl_third_country_bra...

What Changed

• - OSFI is proposing targeted revisions to the existing Capital and Liquidity Treatment of Crypto‑asset Exposures (Banking) Guideline, rather than a wholesale rewrite, in order to better reflect...
• The draft changes would explicitly recognize cross‑exchange hedging for Group 2a crypto‑assets when the instruments are traded on regulated exchanges of traditional financial assets, allowing more...
• Under the proposal, banks’ market‑neutral strategies in Group 2a crypto‑assets would receive capital treatment that more closely reflects actual economic risk, reducing instances where only partial...
• No change is proposed to the risk weights applied to Group 2a crypto‑assets, meaning existing Group 2a capital charge levels remain intact under the draft revisions.
• No change is proposed to the eligibility of Group 2a crypto‑assets as collateral, so current collateral treatment and related haircuts remain unchanged by this consultation.

Suggested Considerations

• Assess whether your institution currently has, or plans to have, exposures to Group 2a crypto‑assets traded on regulated exchanges of traditional financial assets, and map all related positions, hedges, and trading strategies.
• Review existing market‑neutral and cross‑exchange hedging strategies for crypto‑asset exposures to determine how expanded recognition of cross‑exchange hedges could change risk‑weighted assets, leverage exposure, and liquidity metrics under OSFI’s proposed treatment.
• Perform an impact assessment and scenario analysis comparing existing capital and liquidity requirements for Group 2a exposures under the current guideline versus the proposed cross‑exchange hedge recognition, quantifying potential capital relief or shifts in capital allocation.
• Update internal capital policy documentation, trading desk procedures, and risk‑management standards to incorporate the proposed hedging recognition framework, including eligibility criteria for “regulated exchanges of traditional financial assets,” subject to final OSFI requirements.
• Prepare and submit a consultation response to OSFI by 20 July 2026, highlighting any operational, risk‑measurement, model, or documentation challenges with implementing cross‑exchange hedge recognition and recommending clarifications where needed.

Key Dates

References

• [1] osfi-bsif.gc.ca/en/about-osfi/multimedia-library/osfis-ca...
• [2] osfi-bsif.gc.ca/en/guidance/guidance-library/capital-liqu...
• [3] osfi-bsif.gc.ca/en/news/osfi-launches-consultation-regula...
• [4] youtube.com/watch?v=TfnKz7h5RIc
• [5] osfi-bsif.gc.ca/en/about-osfi/progress-our-initiatives/mo...
• [6] mcmillan.ca/insights/publications/osfi-allows-greater-cry...
• [7] osfi-bsif.gc.ca/en/guidance/guidance-library/capital-liqu...
• [8] osfi-bsif.gc.ca/en/guidance/guidance-library

What Changed

• - OSFI proposes to amend Guideline B‑12 – Interest Rate Risk Management to update prescribed interest rate shock scenarios used for measuring interest rate risk in the banking book.
• The interest rate shock calibration will be aligned with the most recent BCBS methodology for IRRBB, including improved treatment of environments where policy rates are close to zero or negative.
• The time series used to calibrate interest rate shock scenarios will be extended from a previous cut‑off of December 2015 to now incorporate data through December 2023, capturing the recent period of...
• OSFI intends to strengthen transparency and market discipline by consulting simultaneously on proposed amendments to Pillar 3 disclosure expectations related to interest rate risk in the banking book.
• The revised B‑12 guideline will introduce updated expectations for IRR measurement, monitoring, and reporting that ensure institutions recognize more recent market experience in their internal risk...

Suggested Considerations

• Perform a gap analysis comparing current interest rate risk in the banking book methodologies, shock scenarios, and assumptions against the proposed revised Guideline B‑12 parameters and BCBS‑aligned calibration approach.
• Engage internal stakeholders (risk management, treasury/ALM, finance, regulatory reporting, model validation, and internal audit) to review the consultation text and identify operational, data, and model impacts from the extended December 2015–December 2023 calibration window and new shock design.
• Prepare and submit a detailed written response to OSFI at Consultations@osfi-bsif.gc.ca by 20 July 2026, highlighting any concerns with scenario calibration, procyclicality, data availability, systems impacts, and implementation timelines.
• Update IRRBB models, interest rate scenario engines, behavioral assumptions (e.g., non‑maturity deposits, prepayments), and risk metrics (e.g., economic value of equity and earnings‑at‑risk) to incorporate the revised OSFI shock scenarios once the final guideline is published on 10 September 2026.
• Revise internal IRRBB policies, risk appetite statements, limits frameworks, and governance documentation to align with the updated Guideline B‑12 expectations and ensure Board and senior management oversight reflects the new calibration.

Key Dates

References

• [1] osfi-bsif.gc.ca/en
• [2] en.wikipedia.org/wiki/Office_of_the_Superintendent_of_Fin...
• [3] publications.gc.ca/collections/collection_2012/bsif-osfi/...

What Changed

• - Extends the scope of Guideline B‑2 (Large Exposure Limits) beyond domestic systemically important banks (DSIBs) to include Category 1 and Category 2 small and medium‑sized banks (SMSBs), bringing...
• Replaces the existing 1994 large exposure guideline for Category 1 and Category 2 SMSBs with a single modern framework aligned to the January 2019 version of Guideline B‑2.
• Removes Category 3 SMSBs from the large exposure guideline regime, so they will no longer be subject to OSFI large exposure limits under Guideline B‑2.
• Removes foreign bank branches from the scope of the large exposure guideline, so foreign bank branches will no longer be subject to Guideline B‑2 requirements.
• Introduces a hard limit for Category 1 and Category 2 SMSBs that total exposures to a single counterparty or group of connected counterparties must not exceed 25% of the institution’s Tier 1 capital.

Suggested Considerations

• Conduct an impact assessment to quantify current single‑name and connected‑counterparty exposures relative to the proposed 25% of Tier 1 capital limit for Category 1 and Category 2 SMSBs.
• Identify and map all existing large exposure policies, procedures, and limits that are based on the 1994 large exposure guideline and plan their replacement with a framework aligned to the 2019 Guideline B‑2 approach.
• Review and, where necessary, redesign methodologies and internal criteria for identifying groups of connected counterparties so they are consistent with OSFI’s updated expectations under the draft revised Guideline B‑2.
• Update credit risk measurement processes and systems so that exposures for large exposure purposes are calculated net of eligible credit risk mitigation in line with OSFI capital requirements.
• Assess data, systems, and reporting capabilities to ensure the institution can produce quarterly large exposure reports using the same template as larger banks, including drill‑downs by counterparty and connected counterparty groups.

Key Dates

References

• [1] osfi-bsif.gc.ca/en/news/save-date-osfis-second-quarterly-...
• [2] newswire.ca/news-releases/osfi-s-quarterly-release-streng...
• [3] osfi-bsif.gc.ca/en/about-osfi/progress-our-initiatives/mo...
• [4] mcmillan.ca/wp-content/uploads/2024/03/GLI-BR24_Chapter-4...
• [5] osfi-bsif.gc.ca/en/guidance/guidance-library
• [6] bis.org/bcbs/publ/d473.pdf
• [7] osfi-bsif.gc.ca/en/guidance/guidance-library/climate-risk...

What Changed

• - Circular CSSF 26/911 replaces Circular CSSF 25/877 and integrates ESMA’s 2025 Guidelines on stress test scenarios under Article 28 of Regulation (EU) 2017/1131 (MMFR), making the updated scenarios...
• The 2025 ESMA Guidelines (Ref. ESMA50-481369926-30585) update the common reference stress test parameters for MMFs, reflecting more recent market conditions and liquidity risk drivers than the 2024...
• The circular clarifies that MMFs and MMF managers must use the updated 2025 ESMA stress test scenarios when preparing the MMF reporting required under the MMFR and the related Commission Implementing...
• Circular CSSF 26/911 confirms that the 2025 Guidelines and their translations, published by ESMA on 26 March 2026, are now integrated into CSSF supervisory practice, following the ESMA process...
• The circular reiterates that MMFs and their managers must tailor the ESMA reference scenarios to the specificities of each MMF, adding additional risk factors or requirements where needed to ensure...

Suggested Considerations

• Identify all MMFs and MMF mandates in scope of Regulation (EU) 2017/1131 for which the CSSF is the competent authority and confirm that they are currently using the 2024 ESMA stress test framework under Circular CSSF 25/877.
• Obtain and review in detail the ESMA 2025 Guidelines on stress test scenarios (ESMA50-481369926-30585) and the annexed parameters as integrated by Circular CSSF 26/911, comparing them line‑by‑line to the 2024 version to map all methodological and parameter changes.
• Update the MMF stress testing policy and procedures to reference Circular CSSF 26/911 and the 2025 ESMA Guidelines, including explicit descriptions of the scenarios, calibration choices, modelling techniques, and governance for scenario approval.
• Recalibrate stress testing models and tools used for MMFs to reflect the 2025 common reference parameters, ensuring that interest rate shocks, credit spread moves, liquidity shocks, redemption scenarios, and concentration risks are aligned with the new ESMA specifications.
• Perform impact analyses on representative MMFs using both 2024 and 2025 parameters to quantify changes in stress outcomes, and prepare internal briefing materials for senior management and boards explaining the impacts on liquidity and risk profiles.

Key Dates

References

• [1] bdo.lu/en-gb/insights-en/advisory-en/cssf-circular-26-906...
• [2] cssf.lu/wp-content/uploads/cssf26_911eng.pdf
• [3] loyensloeff.com/insights/news--events/news/circular-cssf-...
• [4] klgates.com/Luxembourgs-CSSF-Circular-26/906-on-Central-A...
• [5] pwc.lu/en/newsletter/2026/cssf-circular-26-906-in-focus.html
• [6] cms.law/en/lux/legal-updates/circular-cssf-26-906-compile...
• [7] cssf.lu/en/Document/circular-cssf-26-904/
• [8] cssf.lu/en/Document/circular-cssf-26-909/

What Changed

• - Exemptive Order: Provides relief from the SEC's broker-dealer customer protection rule (Rule 15c3-3), permitting dually registered broker-dealer/FCMs that are joint clearing members of FICC and CME...
• Rule Change Approval: Approves FICC's filing to incorporate a Third Amended and Restated Cross-Margining Agreement with CME into its Government Securities Division rules, enabling cross-margining at...
• Scope Expansion: Shifts from prior restrictions where only clearing members could cross-margin, now extending to eligible customers of qualifying firms, with safeguards for customer fund segregation...

Suggested Considerations

• Qualifying Firms: Review and ensure compliance with exemptive order conditions (e.g., customer eligibility, account segregation, risk controls) before offering cross-margining; update internal policies, systems, and customer agreements to support combined margin calculations in futures accounts.
• Operational Updates: Implement changes to clearing and margining processes aligned with the Third Amended Cross-Margining Agreement; conduct testing with FICC and CME for customer-level arrangements.
• Documentation and Reporting: Maintain records demonstrating adherence to Rule 15c3-3 exemptions and notify customers of new margining options; monitor for CFTC parallel requirements on commingled funds.
• Legal/Compliance Review: Assess dual SEC/CFTC registration status and joint membership; consult with counsel on condition-specific interpretations.

Key Dates

References

• [1] sec.gov/newsroom/press-releases/2026-36-sec-approves-exem...
• [2] investing.com/news/economy-news/sec-approves-rule-change-...
• [3] en.bloomingbit.io/feed/news/110060
• [4] cftc.gov/PressRoom/PressReleases/9214-26
• [5] financemagnates.com/institutional-forex/sec-grants-condit...
• [6] tradingview.com/news/financemagnates:5ea56691a094b:0-sec-...

What Changed

• - Adoption of ESMA Guidelines: CSSF formally applies ESMA's guidelines (ESMA34-671404336-1364), focusing on LMT selection (e.g., redemption gates, suspension of redemptions/dealings, side pockets),...
• Calibration Requirements: IFMs must demonstrate fair and reasonable ADT calibration for normal and stressed conditions, including explicit transaction costs and, where appropriate, estimated implicit...
• LMT Recommendations: IFMs should select at least one quantitative-based LMT, one ADT, one for normal conditions, and one for stressed conditions; consider additional measures.
• Scope Expansion Recommendation: Open-ended SIFs (not under Part II of the 2010 Law) should consider the circular alongside Commission Delegated Regulation (EU) 2026/465.

Suggested Considerations

• Review and Update Policies: IFMs must select, calibrate, activate/deactivate LMTs per ESMA guidelines, documenting fair/reasonable ADT calibration (e.g., transaction costs, market impact analysis).
• Demonstrate Compliance: Be prepared to show regulators liquidity risk management, including at least one quantitative LMT, one ADT, and condition-specific tools; integrate with UCITS/AIFMD requirements.
• Risk Management Integration: Ensure primary responsibility for LMTs, with consistent supervisory application; open-ended SIFs to cross-reference with (EU) 2026/465.
• Supervisory Preparedness: Maintain records of previous transactions for market impact estimation and overall LMT rationale.

Key Dates

References

• [1] cssf.lu/wp-content/uploads/cssf26_910eng.pdf
• [2] grantthornton.lu/en/insights/why-cssf-circular-26-905-mar...
• [3] natlawreview.com/article/luxembourgs-cssf-circular-26906-...
• [4] cssf.lu/en/Document/circular-cssf-26-910/
• [5] aztec.group/us/insights/circular-cssf-25-901/
• [6] loyensloeff.com/insights/news--events/news/circular-cssf-...
• [7] cssf.lu/en/Document/circular-cssf-26-909/
• [8] cms.law/en/lux/legal-updates/circular-cssf-26-906-compile...

What Changed

• - New Operational Guide to Transfer Resolution: Details BoE's execution of transfers to private sector purchasers or temporary bridge banks, including recapitalisation payments and use of resolution...
• Updates to Operational Guide to Bail-in Resolution: Introduces an alternate approach where affected creditors receive non-transferable contingent beneficial interests (simplifying bail-in by...
• US SEC No-Action Letter: Confirms non-transferable contingent beneficial interests for US investors need no SEC registration, aiding cross-border bail-in operability.[BoE News...

Suggested Considerations

• Assess resolvability: Major firms perform and disclose self-assessments under RAF; address identified barriers or face BoE powers to mandate fixes.
• Enhance capabilities: Implement MREL, operational continuity in resolution (OCIR), and Single Customer View for deposits; prepare for recapitalisation or non-transferable interests in bail-in.
• Cross-border coordination: US-exposed firms leverage SEC No-Action Letter for bail-in planning; engage BoE on international strategies.[BoE News Release](https://www.bankofengland.co.uk/news/2026/april/boe-enhances-resolution-readiness-with-updated-operational-guides)
• Monitor thresholds: Notify BoE/PRA if approaching £25bn assets or account thresholds.

Key Dates

References

• [1] bankofengland.co.uk/paper/2023/the-bank-of-englands-appro...
• [2] bankofengland.co.uk/paper/2025/maintaining-a-fit-and-read...
• [3] assets.publishing.service.gov.uk/media/658d4f3b23b70a000d...
• [4] fsb.org/uploads/c_121218d.pdf
• [5] regulationtomorrow.com/eu/updates-to-the-bank-of-englands...
• [6] bankofengland.co.uk/financial-stability/operational-resil...
• [7] srb.europa.eu/system/files/media/document/2025-01-23_Oper...
• [8] dlapiperintelligence.com/investmentrules/blog/articles/20...

What Changed

• - Exemption from LTI limit: Principal home bridging loans—defined as short-term loans (maximum 18 months) enabling homeowners to buy a new principal home before selling their current property, repaid...
• LTV limit retained: Maximum 90% LTV continues to apply to these loans, alongside the 15% flexibility allowance for first-time/second/subsequent buyer lending.
• No other changes: All remaining mortgage measures, including consumer protection rules and lenders' prudent underwriting obligations, stay intact.
• Monitoring commitment: CBI will track the exemption's operation within its regular mortgage measures assessments for unintended risks.

Suggested Considerations

• Update lending policies: Identify and classify principal home bridging loans (max 18 months, repayment from property sale, no capital repayments required during term) to apply LTI exemption but enforce 90% LTV.
• Enhance underwriting: Conduct individual suitability and affordability assessments beyond macroprudential limits; do not rely solely on exemption.
• Strengthen consumer protections: Fully inform borrowers of risks (e.g., sale delays, interest costs); ensure products suit circumstances per consumer protection rules.
• Internal monitoring and reporting: Track bridging loan volumes within flexibility allowances; prepare for CBI inquiries as part of ongoing assessments.
• Staff training and systems updates: Revise origination, disclosure, and compliance systems promptly to operationalize changes.

Key Dates

References

• [1] centralbank.ie/news/article/press-release-targeted-amendm...
• [2] irishtimes.com/business/2026/04/08/central-bank-eases-mor...
• [3] irishlegal.com/articles/mortgage-regulations-change-to-in...
• [4] askaboutmoney.com/threads/central-banks-new-rules-allow-b...
• [5] housing2030.org/project/macroprudential-mortgage-rules-in...
• [6] centralbank.ie/news/article/press-release-central-bank-pu...

What Changed

• - Review of LTI flow limit: PRA is reviewing the rule limiting new residential mortgages with LTI ≥4.5x to 15% of total new lending, following FPC recommendations; no final changes proposed yet, but...
• Threshold increase (prior update): Flow limit now triggers only for firms issuing ≥£150M in residential mortgages annually (up from £100M), effective 11 July 2025, exempting ~80 smaller lenders (up...
• Interim modification by consent: Firms can apply to disapply the 15% cap temporarily; requires submitting business plans, risk frameworks, and monthly reporting on high-LTI volumes.
• Exclusions remain: No LTI limit for re-mortgages (no principal change), lifetime mortgages, or second/subsequent charge mortgages (per historical rules).
• Group allocations: Firms in groups can share high-LTI allowances, with record-keeping required.

Suggested Considerations

• Apply for modification (if seeking >15% high-LTI): Submit detailed business plan (incl. quarterly high-LTI projections), risk appetite, management frameworks; provide monthly notifications on approvals/completions.
• Monitor thresholds: Track rolling 4-quarter mortgage volumes/contracts (≥£150M and ≥300 contracts in two periods triggers limit).
• Record-keeping: Document high-LTI allowances, group allocations, exclusions.
• Respond to consultation: Provide feedback on CP6/26 proposals via PRA channels (deadline not specified in summary; check full paper).
• Engage regulators: FCA firms contact FCA for tailored guidance on high-LTI increases.

Key Dates

References

• [1] finreg.aoshearman.com/PRA-to-review-Loan-to-Income-flow-l...
• [2] tlt.com/insights-and-events/insight/pra-and-fca-raise-hig...
• [3] bankofengland.co.uk/-/media/boe/files/prudential-regulati...
• [4] fca.org.uk/publication/consultation/cp26-6.pdf
• [5] mayerbrown.com/en/insights/publications/2026/02/new-propo...
• [6] fca.org.uk/publications/consultation-papers/cp26-6-rules-...
• [7] bankofengland.co.uk/prudential-regulation/publication/202...
• [8] regulationtomorrow.com/2026/02/pra-consults-on-significan...

What Changed

• The final MELL for 2026/27 comprises:
• Management expenses budget: £108 million (£4.4 million increase from 2025/26, broadly in line with inflation)
• Unlevied reserve: £5 million (for unforeseen costs without requiring further consultation)
• Total MELL: £113 million Budget allocation details:
• Investment budget: £5.5 million (10% increase from 2025/26) supporting the FSCS' new five-year strategy launching in 2026/27

Suggested Considerations

• *Immediate compliance actions for affected firms:
• *Budget planning: Incorporate the £113 million MELL into financial forecasting and levy allocation models for the 2026/27 financial year (April 1, 2026 onwards)
• *Levy calculation: Ensure systems are updated to reflect the new budget allocation across PRA and FCA funding classes (detailed in Appendix 4 of CP1/26)
• *Reserve provisioning: Account for the £5 million unlevied reserve in contingency planning, recognizing FSCS may levy additional funds at short notice for unforeseen costs
• *RCF cost allocation: Confirm whether your firm is subject to the expanded RCF cost allocation (particularly relevant for credit unions, which raised concerns during consultation)

Key Dates

References

• [1] regulationtomorrow.com/2026/03/pra-ps8-26-fscs-mell-2026-27/
• [2] finreg.aoshearman.com/uk-pra-and-fca-consult-on-the-fscs-...
• [3] bankofengland.co.uk/prudential-regulation/publication/202...
• [4] bankofengland.co.uk/prudential-regulation/publication/202...
• [5] ukgicompliance.com/fca-and-pra-consult-on-fscs-2026-27-ma...
• [6] fca.org.uk/publications/consultation-papers/cp26-2-financ...
• [7] fscs.org.uk/media/press/2026/jan/fscs-202627-budget-deliv...
• [8] cms.law/en/gbr/regulatory-news/pra-fca-fscs-management-ex...

What Changed

• This enforcement action does not introduce new regulatory requirements but rather clarifies existing obligations:
• Internal Models Scope Limitation: Banks must strictly adhere to supervisory permissions when applying internal models approaches; unauthorized asset classes cannot be included regardless of...
• Risk-Weighted Asset Accuracy: RWA calculations must reflect actual supervisory permissions, not theoretical modeling capabilities
• Capital Ratio Integrity: Misreporting of RWAs directly affects CET1 ratios and capital adequacy disclosures, which are fundamental to regulatory reporting
• Intentionality Standard: The ECB's classification of this breach as "intentional" (rather than negligent) indicates that awareness of supervisory limitations combined with non-compliance triggers...

Suggested Considerations

• *Immediate (for all firms with internal models):
• *Audit Internal Models Scope: Conduct comprehensive review of all asset classes currently included in internal models approaches to confirm supervisory permission exists for each category
• *Verify Sovereign Bond Derivatives Treatment: Specifically validate that all sovereign bond options, forwards, and other derivatives are explicitly covered by supervisory approval documentation
• *Reconcile RWA Calculations: Recalculate historical RWAs (at minimum for the past 3-5 years) to identify any unauthorized inclusions and assess whether prior reporting was accurate
• *Strengthen Internal Controls: Implement automated controls to prevent unauthorized asset classes from being included in model calculations, with documented supervisory permission matrices

Key Dates

References

• [1] bankingsupervision.europa.eu/press/pr/date/2026/html/ssm....
• [2] intellectia.ai/news/stock/ecb-imposes-penalty-on-bofa-sec...
• [3] finanssivalvonta.fi/en/publications-and-press-releases/ne...
• [4] moodys.com/web/en/us/kyc/resources/insights/the-global-sa...
• [5] taylorwessing.com/fr/insights-and-events/insights/2026/01...
• [6] cliffordchance.com/content/dam/cliffordchance/briefings/2...
• [7] bankingsupervision.europa.eu/activities/sanctions/supervi...
• [8] disruptionbanking.com/2026/02/19/ecb-sanctions-j-p-morgan...

What Changed

This circular introduces no substantive changes to survey content, methodology, or reporting specifications compared to prior issuances (e.g., CSSF-CPDI 25/49 for 31 December 2025). Updates are limited to the reference date (31 March 2026) and associated deadlines, maintaining the risk-based ex-ante contribution method from Circular CSSF-CPDI 20/21 and quarterly reporting under CSSF-CPDI 17/07.

Suggested Considerations

• Compile data on covered deposits (eligible deposits up to €100,000 per depositor, per Article 163 of 2015 Law), excluding items per Article 172 (e.g., financial institutions, life insurance).
• Report detailed breakdowns: total eligible/covered deposits, omnibus/fiduciary accounts (with beneficiary counts), natural vs. legal persons, branch-level data.
• Submit via specified format (per attached specs, unchanged from priors) to CPDI by deadline; quarterly data ongoing per CSSF-CPDI 17/07.
• Ensure alignment with FGDL contributions under CSSF-CPDI 25/48.

Key Dates

References

• [1] cssf.lu/en/protection-of-depositors-and-investors/
• [2] cssf.lu/en/Document/circular-cssf-cpdi-25-49/
• [3] cssf.lu/wp-content/uploads/newsletter300.pdf
• [4] cssf.lu/en/regulatory-framework/page/2/
• [5] cssf.lu/wp-content/uploads/CSSF_CPDI_2549eng.pdf
• [6] fgdl.lu/en/473/
• [7] cssf.lu/en/regulatory-framework/page/3/
• [8] cliffordchance.com/content/dam/cliffordchance/PDFDocument...

What Changed

SS9/17 introduced several material enhancements to recovery planning requirements: Governance and Integration: Recovery planning must be embedded within firms' risk management frameworks, with board-level oversight and integration with stress testing and ICAAP processes. The PRA expects clear governance documentation showing how plans are produced, reviewed, signed off, and implemented. Fire Drill Exercises: Firms must conduct regular fire drill exercises that simulate recovery scenarios in a live environment, testing governance arrangements, management information systems, and the...

Suggested Considerations

• *Develop comprehensive recovery plans containing all minimum elements specified in the Recovery Planning Part of the PRA Rulebook and detailed in SS9/17
• *Establish governance frameworks documenting how recovery plans are produced, reviewed, approved by the board, and how recovery options would be implemented
• *Conduct fire drill exercises that simulate recovery scenarios, test governance arrangements, and validate management information capabilities
• *Create implementation playbooks (for complex plans) that enable rapid execution by senior management during stress
• *Perform detailed impact analysis for each recovery option, quantifying capital and liquidity impacts with realistic timelines

Key Dates

References

• [1] bankofengland.co.uk/prudential-regulation/publication/201...
• [2] bankofengland.co.uk/-/media/boe/files/prudential-regulati...
• [3] regulationtomorrow.com/2017/12/pra-publishes-policy-state...
• [4] clearygottlieb.com/~/media/organize-archive/cgsh/files/20...
• [5] risk.jaywing.com/news-views/pra-cp9-17-is-your-recovery-p...
• [6] prarulebook.co.uk/guidance
• [7] jdsupra.com/legalnews/uk-prudential-regulation-authority-...
• [8] knowco.co.uk/wp-content/uploads/2018/10/CP9-17_Digest_170...

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...
• 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 – Recovery planning (Appendix 4); no...
• PRA Review Commitment: Threshold will be reviewed periodically (e.g., after reporting cycles or significant changes), but not indexed to GDP or on a fixed schedule as some respondents suggested.

Suggested Considerations

• Scope Assessment: Immediately review retail deposits as of 1 April 2026; firms newly in-scope (≥£100bn) await PRA communication on first report/disclosure dates and prepare accordingly.
• Recovery Plans: SDDTs/SDDT groups update review cycles to biennial starting 1 April 2026; ensure plans meet SS9/17 standards for quality.
• Reporting/Disclosure: In-scope firms align internal processes with Rulebook amendments (Appendices 2-4); test systems for new threshold.
• Governance: Document compliance with updated frameworks; monitor for PRA threshold reviews and related PS9/26/PS11/26 implementations.
• Monitoring: Track retail deposits quarterly to anticipate scope changes; engage PRA if nearing threshold.

Key Dates

References

• [1] bankofengland.co.uk/prudential-regulation/publication/202...
• [2] bankofengland.co.uk/news/2026/march/boe-streamlines-repor...
• [3] bankofengland.co.uk/prudential-regulation/publication/202...
• [4] aoshearman.com/en/insights/financial-services-horizon-rep...
• [5] regulationtomorrow.com/2025/06/pra-ps10-25-pra-annual-fee...
• [6] fsb.org/uploads/P210126-1.pdf
• [7] jdsupra.com/legalnews/uk-prudential-regulation-authority-...
• [8] lexisnexis.co.uk/legal/news/pra-publishes-policy-statemen...

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...
• 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...
• Disclosure basis statement: Firms must specify their Pillar 3 regime (e.g., resolution entity, O-SII, large institution), frequency, and details like reference date, currency, LEI, accounting...
• Minor amendments: Reflects HMT's revocation of CRR Article 92a; updates to Disclosure (CRR) and Reporting (CRR) Parts of PRA Rulebook, with semi-annual key metrics for certain firms.
• No substantive policy changes post-consultation; costs/benefits assessment unchanged.

Suggested Considerations

• Update Pillar 3 processes to use new MREL templates (Annex XXVII instructions), UK CC1 with CDC narrative, and basis statement (e.g., reference date, LEI, scope).
• For CDC-subject firms: Prepare qualitative narrative on restriction impacts.
• 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.g., Article 92a revocation).

Key Dates

References

• [1] bankofengland.co.uk/prudential-regulation/publication/202...
• [2] bankofengland.co.uk/news/2026/march/boe-streamlines-repor...
• [3] jdsupra.com/legalnews/uk-pra-policy-statement-on-final-19...
• [4] bankofengland.co.uk/-/media/boe/files/prudential-regulati...
• [5] regulationtomorrow.com/2026/03/fca-pra-and-boe-issue-poli...
• [6] bankofengland.co.uk/prudential-regulation/publication/202...
• [7] regulationtomorrow.com/eu/pra-publishes-finals-rules-on-s...
• [8] bankofengland.co.uk/-/media/boe/files/prudential-regulati...

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...
• 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.

Suggested Considerations

• 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

References

• [1] bankofengland.co.uk/prudential-regulation/publication/202...
• [2] bankofengland.co.uk/-/media/boe/files/prudential-regulati...
• [3] bankofengland.co.uk/news/2026/march/boe-streamlines-repor...
• [4] srb.europa.eu/en/content/2026-resolution-reporting
• [5] jdsupra.com/legalnews/implementing-regulation-on-reportin...
• [6] aoshearman.com/en/insights/financial-services-horizon-rep...
• [7] bankofengland.co.uk/prudential-regulation/publication/202...
• [8] cssf.lu/wp-content/uploads/Reporting-for-Resolution-Plann...