Help us develop a proportionate reporting regime for ESG ratings. Register your interest by 13 May 2026. We're inviting ESG rating providers to join a pilot to inform future regulatory reporting once the regime is live.Our aim is to avoid unnecessary reporting burden for firms over time.The pilot aims to help us assess whether the proposed metrics for ESG ratings reporting are:clearfeasibleproportionate across different business modelsuseful for supervisory purposesParticipants will have a di...
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Speech by Sheree Howard at the APCC Spring Conference 2026. This weekend, tens of thousands of runners will line up in Greenwich Park for the start of the London Marathon.Well done to them – a Netflix marathon is much more my speed.Unlike what’s needed to prepare for a Netflix marathon – opening a bag of sweet and salty popcorn – Sunday’s runners will have been training for months. Many even years.And nearly all will have had support along the way, whether from a coach, physio or friend at a ...
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Given at the PSE–BdF Conference on International Macroeconomics in Historical Perspective at the Banque de France in Paris
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Given at the London School of Economics
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Given at the Bellagio Group event, Bank of England
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Given at National University of Singapore
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Earlier this year, we undertook a refresh of our Sustainable Finance Advisory Committee. In line with good governance, we planned to refresh the membership on a staggered basis, allowing us to bring in new expertise whilst benefiting from some continuity. Following this process, we are pleased to announce the appointment of two new members to the Committee:Elly Dowding, Director of ESG AccordFarnam Bidgoli, Independent AdviserThese appointments reflect our commitment to drawing on diverse exp...
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The Bank of England (the Bank) has today launched its second system-wide exploratory scenario (SWES) exercise. This will focus on how the private markets ecosystem operates under stress and the potential implications for UK financial stability and the UK real economy.
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Policy statement 25/25
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.
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...
- Governance strengthening: Boards and senior management must actively oversee climate risks, embedding them in strategy and ensuring accountability.
- Risk management enhancements: Integrate climate risks into existing frameworks/risk registers (supplementary sub-registers allowed); 'accept, manage, avoid' is suggestive, not mandatory; aligns with...
- Climate scenario analysis (CSA) advancements: Firms must use CSA strategically for decisions; flexibility on number/type of scenarios, reverse stress/sensitivity analysis, and longer horizons...
Suggested Considerations
- Conduct gap analysis against SS5/25 within 6 months and remediate (e.g., update governance, risk frameworks, CSA processes).
- 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.
- Document proportionate application (two-step process: materiality assessment, risk response); leverage existing structures where robust.
- Ensure senior accountability and alignment with standards like SS1/21.
Key Dates
- PS25/25 and SS5/25 published; SS5/25 effective immediately, replacing SS3/19
- Firms assess gaps against new expectations and develop remediation plans (industry guidance)
- 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 maturing climate risk landscape.
AI-generated analysis. May contain errors or omissions — verify with the
original PRA source
before acting. Full disclaimer.
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Supervisory statement 5/25
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.
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,...
- Governance enhancements: Emphasizes board accountability, integration into business strategy, climate risk appetite statements, and linkage to Senior Managers & Certification Regime (SM&CR) without...
- Risk management integration: Requires embedding climate risks into existing frameworks with quantitative metrics/limits where material; detailed mapping of risks (e.g., physical/transition via...
- Scenario analysis: Firms must conduct climate scenario exercises capturing plausible pathways, impacts on capital/liquidity/solvency, with transparent assumptions and management challenge;...
- Data expectations: Critical assessment of data sources/quality (e.g., geographic/sectoral for banks, hazard/vulnerability for insurers); use proxies with documented limitations.
Suggested Considerations
- Conduct materiality assessment of climate risks to scope proportionality (leverage TCFD/CSRD work).
- Embed climate risks in governance: Define risk appetite, update SM&CR responsibilities, ensure board MI/challenge.
- Integrate into risk frameworks: Update risk registers, ICAAP/ILAAP/ORSA/SCR with quantitative metrics, scenarios, and controls; adjust underwriting/pricing/collateral.
- Perform climate scenario analysis: Model impacts on capital/liquidity/solvency using plausible pathways.
- Enhance data: Source/assess granular data (e.g., location/sector/hazards), document proxies/limitations.
Key Dates
Consultation paper CP10/25 issued (feedback incorporated in final policy)
Firms assess gaps against new expectations and develop implementation plans
Publication of PS25/25 and SS5/25; replaces SS3/19 effective immediately
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 stability and alignment with global standards.
AI-generated analysis. May contain errors or omissions — verify with the
original PRA source
before acting. Full disclaimer.
BankInsurance
Statement from the Bank of England
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Given at the Confederation of British Industry
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Given at central Bank of Ireland ninth annual workshop of the ESCB research cluster 2
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Slides by Victoria Saporta
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Given at the Group of Thirty’s 40th International Banking Seminar 2025, Washington DC
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Given at the Scotland Global Investment Summit 2025
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Given at the Klaas Knot Farewell Symposium
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Given at Cardiff Business School
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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.
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.
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...
- Recovery strategies: Ongoing risk of historical bias in Loss Given Default (LGD) estimates; challenge realism of recovery assumptions for vulnerable sectors/borrowers.
- Climate risks: Greater emphasis on identifying/assessing/modelling climate drivers in ECL (e.g., via expert judgement, stress tests); align with PRA's SS1/23 on model risk and upcoming clarifications...
Suggested Considerations
- Conduct self-assessments against annex "areas of focus" (model risk, recovery, climate) and share with auditors ahead of 2026 reporting.
- Enhance PMAs: Challenge completeness for emerging risks (e.g., interest rates, sectors); link to emerging risk analysis.
- Model improvements: Monitor redevelopment plans; ensure granular monitoring, comprehensive reviews, skilled independent assurance; define model boundaries.
- Recovery processes: Strengthen challenges to LGD recovery assumptions for vulnerable exposures.
- Climate integration: Improve risk identification, quantitative analysis, data/modelling, oversight; align governance with SS1/23.
Key Dates
- Auditor reports reviewed by PRA (basis for this feedback)
- PRA issues Dear CFO Letter with thematic feedback
- 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 prudential stability as ECL underpins capital requirements.
AI-generated analysis. May contain errors or omissions — verify with the
original PRA source
before acting. Full disclaimer.
Bank
Given at the Adam Smith Business School, University of Glasgow
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Based on remarks given at the Chapman-Barrigan lecture
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Given at British Chamber of Commerce 2025 Global Annual Conference
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Given at the Global Investment Management summit
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