The FCA has charged Shaun Lawrence for operating as a mortgage broker without authorisation. Mr Lawrence, who also goes by the names Shaun Lawrence-Bright and Shaun Bright, was previously authorised to give mortgage advice.However, in 2008 he had his permissions revoked and was fined. He was also banned from working in financial services.The FCA alleges that Mr Lawrence has breached the Financial Services and Markets Act by continuing to provide mortgage broking services when already banned.M...
Broker Dealer
Open finance has vast potential. It promises to transform financial services for millions of people through firms using customers’ data in bigger and better ways. But to make that promise a reality, we need to look at how it works in practice. How does sharing data solve real problems for people and businesses?That’s the question we want to answer with our Smart Data Accelerator, which enables firms to showcase open finance solutions in a digital testing environment to help shape policy makin...
Fintech
How we're investing in data and analytics in consumer financeOur goal is regulation that is evidence-based, targeted, and achieves good outcomes for consumers. That’s why we’ve been using richer datasets and sharper data science to drive better outcomes in the consumer finance market, widen financial inclusion, and support economic growth.This blog post explains one way we've been doing that, in a proof-of-concept undertaken by the team of Isabela Barra, Daniel Bogiatzis-Gibbons, Lawrence Cha...
BankFintechAll Firms
Consultation paper 6/26
CP6/26 from the PRA consults on reforms to the **high loan-to-income (LTI)** lending rules for residential mortgages, building on prior adjustments to the flow limit that caps high-LTI loans (≥4.5x borrower income) at 15% of total new lending for larger lenders. This matters for mortgage providers as it aims to balance financial stability, support housing market growth, and adapt macroprudential measures to current economic conditions, potentially influencing lending capacity and risk management ahead of the June 2026 review deadline (https://www.bankofengland.co.uk/prudential-regulation/publication/2026/april/high-loan-to-income-lending-consultation-paper).
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
PRA offers interim modification by consent applications; firms must submit business plan/risk info within 1 month, then monthly reports (first covering prior 3 months)
£150M threshold increase effective
PRA consultation on permanent LTI flow limit changes (due course post-review)
Interim modifications expire (or earlier if rules amended)
Compliance Impact
Urgency: High – Firms near £150M threshold or planning high-LTI growth must act imminently on modifications (monthly reporting starts soon) to avoid breaches before June 2026 expiry; non-compliance risks enforcement, while opportunities for smaller lenders enhance competitiveness amid housing market pressures (https://www.bankofengland.co.uk/prudential-regulation/publication/2026/april/high-loan-to-income-lending-consultation-paper).
AI-generated analysis. May contain errors or omissions — verify with the
original PRA source
before acting. Full disclaimer.
BankAll Firms
We are going ahead with a scheme to compensate motor finance customers who were treated unfairly. Courts have found that firms broke the law by failing to disclose important information to customers. An industry-wide scheme is the quickest and most cost effective way to deliver fair compensation.We had over 1,000 consultation responses and engaged extensively with consumer groups, professional representatives, firms, manufacturers, investors and industry bodies. While most respondents support...
The FCA has confirmed an industry-wide redress scheme to compensate motor finance customers for unfair treatment due to inadequate disclosure of commissions and ties between 6 April 2007 and 1 November 2024, following court rulings on law-breaking practices. This matters as it imposes up to £9.1 billion in costs on lenders, mandates proactive customer identification and payouts, and aims for rapid resolution while providing finality for firms and market stability.
What Changed
- - Tightened eligibility: Excludes minimal commission agreements (£120 or less pre-1 April 2014; £150 or less post), zero APRs, unused DCAs, and contractual ties where lenders prove visible...
- Two schemes: Separate for 6 April 2007-31 March 2014 and 1 April 2014-1 November 2024 to mitigate legal challenges on pre-2014 powers.
- Compensation adjustments: Reflects higher 2007-2014 losses; capped in ~1/3 cases to avoid over-compensation.
- Streamlined operations: Lenders contact only complainants or eligible non-complainants; no recorded delivery required, cutting delivery costs >40%.
- Scope expansion: Covers DCAs, high commissions, and contractual ties under Consumer Credit Act 1974 ss.140A-C; includes deceased consumers.
Suggested Considerations
- Identify all in-scope agreements (2007-2024 with broker commissions); assess eligibility against tightened criteria (e.g., undisclosed DCA/high commission/tie).
- Contact complainants within 3 months post-implementation; eligible non-complainants within 6 months; invite scheme participation (6-month consumer response window).
- Calculate redress per formula (commission-based, capped, with interest); pay promptly, allowing set-off against customer debts where applicable.
- Gather records now (FCA expectation pre-rules); handle exclusions/exceptions with explanations; prepare for FOS challenges on time-bars.
- Brokers: Respond to lender information requests.
Key Dates
1 November 2024; Scope of agreements eligible for compensation
Cut-off for excluding high commission cases if clearly disclosed (firms must explain and allow FOS challenge)
Millions compensated
End of implementation for 1 April 2014+ loans; lenders then have 3 months to notify complainants of redress
End of implementation for 6 April 2007-31 March 2014 loans; lenders then have 3 months to notify complainants and 6 months for eligible non-complainants
Compliance Impact
Urgency: Critical – Firms face immediate preparation needs (e.g., data gathering) ahead of mid-2026 implementation, with £9.1bn costs, mass customer outreach, and legal risks from dual schemes/challenges. Non-compliance risks enforcement, as FCA expects prompt action for market finality; delays could exceed £6bn in alternative complaint/court costs.
AI-generated analysis. May contain errors or omissions — verify with the
original FCA source
before acting. Full disclaimer.
BankFintechAll Firms
Millions of motor finance customers will receive compensation this year under an FCA scheme for those treated unfairly by firms who broke the law by failing to disclose important information. Consumers were denied the chance to seek a better deal and, in some instances, paid more for their loan.The FCA has made several changes to the free to use scheme in response to conflicting feedback from consumers, their representatives, firms, manufacturers and industry bodies.This ensures it is fair fo...
BankFintechAll Firms
A new taskforce will tackle poor handling of motor finance claims by some claims management companies (CMCs) and law firms, after the FCA, Solicitors Regulation Authority (SRA), Information Commissioner’s Office (ICO) and Advertising Standards Authority (ASA) agreed to join up their efforts. The announcement comes as the FCA prepares to set out its final compensation scheme for motor finance customers.The regulators will step up efforts to share intelligence and continue to take co-ordinated ...
BankFintechAll Firms
We are reminding regulated firms they need to undertake proper checks when dealing with unregulated lenders, safe custody providers, money brokers and financial leasing companies – also known as 'Annex 1' firms. There are around 1,200 of these firms registered with us for solely anti-money laundering purposes. Our powers are currently limited to looking at how these firms are meeting their anti-money laundering obligations and they are not subject to our wider rulebook. This regime is based o...
The FCA statement reminds regulated firms to perform robust due diligence on 'Annex 1' firms—unregulated lenders, safe custody providers, money brokers, and financial leasing companies registered solely for AML purposes—due to their limited oversight and heightened financial crime risks. This matters because Annex 1 firms (approx. 1,200) are not subject to FCA's full rulebook, conduct rules, or protections like the Financial Ombudsman Service, exposing regulated firms to contagion risks if they fail to manage interactions properly. Non-compliance could lead to regulatory scrutiny, enforcement, or reputational damage amid FCA's ongoing AML focus.
What Changed
No new rules or legislative changes are introduced; this is a supervisory reminder reinforcing existing obligations under the Money Laundering Regulations 2017 (MLRs). It emphasizes enhanced due diligence on Annex 1 firms, referencing the 2025 National Risk Assessment (NRA) for risk management. The FCA highlights proactive engagement, including a 2024 letter to CEOs and follow-up with 300 firms in late 2025, signaling intensified supervision without altering the registration-only regime under the Financial Services and Markets Act.
Suggested Considerations
- Verify Annex 1 registration status directly from the firm and via independent checks (e.g., FCA Register).
- Understand the Annex 1 firm's business model, products, and risks, aligning with MLRs and 2025 NRA.
- Manage identified risks, such as AML deficiencies or consumer encouragement into limited company structures for unregulated lending.
- Document due diligence to demonstrate compliance, integrating into broader financial crime frameworks (e.g., BWRA/CRA per FCA findings).
Key Dates
FCA letter to CEOs of Annex 1 firms raising AML concerns.; - **Late 2025 - FCA follow-up engagement with 300 Annex 1 firms.**
Compliance Impact
Urgency: High – This amplifies existing AML due diligence requirements amid FCA's 2025-30 financial crime strategy, with evidence of supervisory action (2024 letter, 2025 follow-ups). Failure risks enforcement, as Annex 1 interactions could facilitate financial crime or consumer harm without FOS protections; firms should audit exposures immediately to align with BWRA/CRA expectations and avoid findings like those in FCA's risk assessment review.
AI-generated analysis. May contain errors or omissions — verify with the
original FCA source
before acting. Full disclaimer.
BankPayment ProviderAll Firms
We have opened an enforcement investigation into Market Financial Solutions Limited (MFS). MFS is an Annex 1 business, which is solely registered with and supervised by us for its compliance with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.Annex 1 registered firms are not authorised or subject to wider FCA regulation.MFS entered administration on 25 February 2026.
The FCA has opened an enforcement investigation into Market Financial Solutions Limited (MFS) following the firm's entry into administration on 25 February 2026, amid allegations of serious financial irregularities, fraud, and double-pledging of collateral. This investigation is significant because it represents regulatory scrutiny of an Annex 1 business—a firm with limited FCA oversight—whose collapse exposed structural weaknesses in private credit markets and raised questions about due diligence practices across the financial sector.
What Changed
- The FCA's enforcement investigation does not introduce new regulatory requirements but rather represents the regulator's response to alleged breaches of existing obligations.
- Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017: MFS's primary regulatory obligation as an Annex 1 registered firm.
Suggested Considerations
- *For MFS and its Administrators:
- Cooperate fully with the FCA enforcement investigation
- Preserve all documentation related to AML/CTF compliance, customer due diligence, and transaction monitoring
- Provide access to bank accounts, transaction records, and compliance files to investigators
- Respond to FCA information requests within specified timeframes
Key Dates
- MFS entered administration
- FCA enforcement investigation opened (current date context)
for investigation completion or enforcement action
Compliance Impact
Urgency: CRITICAL
AI-generated analysis. May contain errors or omissions — verify with the
original FCA source
before acting. Full disclaimer.
BankAll Firms
We’ve reached a significant milestone in our joint work with the Financial Ombudsman Service and the Government to modernise the redress systemso that consumers get fair outcomes quicker and firms have greater clarity about how issues will be handled.We’re delivering change at speed by acting now within our current powers, with a focus on improving how the system works in practice. This includes a new registration stage for complaints, updated dismissal grounds and clearer guidance on the fai...
The FCA, in collaboration with the Financial Ombudsman Service (FOS) and the Government, has announced modernization of the UK's financial redress system to accelerate consumer compensation and provide firms with greater regulatory clarity. This initiative represents a fundamental shift in how complaints are registered, assessed, and resolved, with immediate implementation underway within existing FCA powers and broader legislative reforms planned.
What Changed
The redress system modernization introduces several structural and procedural reforms:
Registration Stage for Complaints
A new formal registration stage has been introduced to standardize how complaints enter the system, improving tracking and early identification of systemic issues across firms and markets.
Updated Dismissal Grounds
The FCA has revised the criteria for dismissing complaints, providing clearer standards that should reduce disputes about complaint admissibility and improve consistency in decision-making.
Enhanced Fair and Reasonable Test Guidance
Clearer guidance on how the...
Suggested Considerations
- *Immediate Operational Priorities (Pre-May 2026):
- *Governance and Accountability
- Appoint senior managers with explicit accountability for complaints handling and redress programmes
- Establish board-level oversight structures with regular reporting on complaints volumes, redress calculations, and regulatory compliance
- Document decision-making frameworks for complaint eligibility and dismissal grounds
Key Dates
- Consumers expected to begin receiving compensation under motor finance scheme
- FCA expected to publish final rules and guidance for motor finance redress scheme, confirming scope, calculation methodologies, and timescales
- Complaints pause lifts for DCA-related motor finance complaints; standard 8-week response deadline resumes
2026 onwards; - Motor finance compensation payments anticipated to commence
Compliance Impact
Urgency: CRITICAL
AI-generated analysis. May contain errors or omissions — verify with the
original FCA source
before acting. Full disclaimer.
BankFintechPayment Provider Lenders and brokers in thesecond charge mortgagemarket need toconsiderhow theyadvise customers, assess affordability and charge fees. An FCA review has found that weaknesses in some firms’ practices could put borrowers, particularly those consolidating debt, at increased risk of financial harm.Second charge mortgages are often used by customers with high existing levels of debt and low financial resilience. The FCA’s review found examples of good practice across the sector but also issues tha...
BankAll Firms
Rajinder Gill and accomplices have been sentenced for their involvement in a sale-and-rent-back scheme. Mr Gill has been sentenced to two and a half years in prison for running a sale-and-rent-back scheme without being authorised and illegally providing credit agreements and mortgages. As accomplices in the scheme, Amandeep Heer received a community order for 2 years with a condition of 250 hours of unpaid work, and Jetinder Sandhu has completed 100 hours' unpaid work over 12 months (as a con...
BankFintech
We'd also streamline the scheme, so millions get compensation in 2026. We're considering over 1,000 responses to our proposals for a compensation scheme for motor finance customers who were treated unfairly.If we proceed with a scheme, we are likely to make several changes. If we do go ahead, we expect to publish final rules in late March. The timing of publication will be outside market hours and we'll confirm the date in advance. Final decisions on the scheme have not yet been made. But to ...
The FCA is implementing a **streamlined motor finance compensation scheme** to address unfair commission disclosure practices, with final rules expected in late March 2026 and scheme launch in early 2026. This represents a major regulatory intervention affecting approximately 14 million motor finance agreements with estimated total redress costs of £8.2 billion, requiring immediate operational preparation by all lenders and finance providers.
What Changed
- The FCA's streamlined approach introduces several material modifications to the original compensation scheme proposal:
Process Streamlining
- Automatic opt-in for prior complainants: Customers who complained before scheme launch will no longer be asked to opt out.
- Immediate acceptance of offers: Consumers can accept redress offers immediately rather than waiting for final determinations.
- Flexible communication channels: Firms are no longer required to use recorded delivery; alternative channels with fraud safeguards are permitted.
Implementation Timeline
- Three-month standard implementation period from scheme launch, with up to five months for older agreements to allow adequate data review and calculation accuracy.
Suggested Considerations
- *Immediate Priorities (Q1 2026):
- *Data Integrity Assessment: Conduct comprehensive audit of historic motor finance agreements to identify eligible customers and validate transactional data completeness, particularly for older agreements.
- *Redress Calculator Development: Build auditable, validated redress calculators capable of:
- Repricing loans based on proposed APR reductions
- Calculating compensatory interest at BoE base rate + 1%
Key Dates
– Scheme implementation begins (exact date dependent on final rules publication)
– FCA to publish final scheme rules (timing to be confirmed in advance, outside market hours)
– Motor finance complaints handling pause lifts; firms must be ready to respond to complaints outside the scheme
– Record retention deadline for all relevant scheme documentation
– Standard implementation period for lenders to contact prior complainants and provide compensation notifications
Compliance Impact
Urgency: CRITICAL
AI-generated analysis. May contain errors or omissions — verify with the
original FCA source
before acting. Full disclaimer.
BankFintechAll Firms
Lenders could have access to more comprehensive information to support lending decisions, under new proposals by the FCA. The FCA is consulting on designating certain credit reference agencies (CRAs). If a lender shares credit information with one designated consumer CRA, it would be required to share it with them all.The changes aim to close gaps in consumers’ credit files and ensure these more accurately reflect people’s financial circumstances.Alison Walters, director of consumer finance a...
BankFintechAll Firms
Policy statement 5/26
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...
- 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, conflict of interest policies, and...
- Other updates: Chapter 17 of SS2/23 amended due to deletion of SS20/15; six-month implementation window for SS2/23 CUSO expectations.
Suggested Considerations
- Review and update policies: Credit unions must conduct due diligence/risk assessments before any CUSO investment/use; implement conflict of interest policies, especially for non-credit union partnerships.
- Ensure structural safeguards: Limit liability to investment amount; maintain legal/operational separation between credit union and CUSO; monitor aggregate investments ≤7.5% of capital.
- Governance alignment: Decisions must prioritize member benefits per legislative objects; update internal investment rules to comply with amended PRA Rulebook (Credit Unions Part).
- Implementation planning: Within six months, integrate SS2/23 expectations into operations; non-engaging credit unions need no action but should monitor for opportunities.
- Reporting/oversight: Prepare for PRA supervision on CUSO risks; consider CBA updates if significantly impacting mutuals.
Key Dates
- Consultation response deadline for CP13/25
- Publication date of PS5/26 (final policy)
- Implementation deadline for SS2/23 CUSO expectations (six months from PS5/26 publication)
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.
AI-generated analysis. May contain errors or omissions — verify with the
original PRA source
before acting. Full disclaimer.
BankFintechAll Firms
The FCA and Solicitors Regulation Authority (SRA) have today issued a joint warning to claims management companies (CMCs) and law firms involved in motor finance commission claims to make sure consumers don’t have multiple representatives for the same claim and are not charged excessive termination fees. The regulators are reminding CMCs and law firms that they are expected to have robust checks in place to confirm consumers have not already instructed another representative. The FCA has also...
BankFintechAll Firms
First-time buyers and the self-employed could get a step-up onto the housing ladder, under new plans from the FCA. Its priorities for reforms to the mortgage market also include helping homeowners unlock housing wealth for a more comfortable later life.The FCA will focus on 4 areas:First-time buyers & underserved consumers: Simplifying mortgage rules to allow more flexible products that reflect different working patterns and income levels at different stages of life.Later-life lending: Review...
BankFintech
Policy statement 26/25
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.
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 objectives of safety,...
- No new rules imposed: PRA deems existing tools sufficient, including Building Societies Act 1986 restrictions, PRA Rulebook, SMCR, and supervision; derivatives permitted only for risk management...
Suggested Considerations
- Review and update policies: Building societies must confirm internal treasury/lending frameworks align with remaining requirements (e.g., PRA Rulebook, Building Societies Act 1986, ICAAP/SREP under amended SS31/15); remove any SS20/15-specific references or processes.
- Assess risk management: Evaluate use of derivatives or treasury tools for compliance with non-prescriptive expectations; ensure SMCR accountability and board oversight.
- Update governance documents: Revise ICAAP/SREP processes per SS31/15 amendments; document rationale for tailored approaches to demonstrate proportionality.
- Engage supervisors: No immediate reporting mandated, but proactive dialogue recommended for firms previously on extensions or complex approaches.
- Monitor related reforms: Track Strong and Simple framework (e.g., PS4/26, PS20/25) for SDDT capital/liquidity simplifications referencing this change.
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) to principles-based supervision, enabling flexibility but heightening reliance on firm-specific risk assessments amid PRA's focus on competition and growth; non-compliance risks arise from over-reliance on withdrawn guidance or inadequate tailoring.
AI-generated analysis. May contain errors or omissions — verify with the
original PRA source
before acting. Full disclaimer.
Bank
The PRA has set the 2025 O-SII buffer rates for ring-fenced banks, large domestic firms, and large building societies
Bank
Policy statement 22/25
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.
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...
- 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 leverage ratio rules during review will cease on 30 June 2026.
These changes are implemented via updates to the Leverage Ratio – Capital Requirements and Buffers...
Suggested Considerations
- 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 3.25% leverage ratio minimum plus buffers if thresholds breached, including systems updates for averaging and reporting.
- For firms with modifications by consent: Plan transition back to full leverage ratio rules by 30 June 2026, including any necessary capital raises or disclosures.
- Update governance, risk models, and board reporting to reflect changes; conduct gap analysis against PRA Rulebook appendices in PS22/25.
Key Dates
- PRA publishes Consultation Paper CP2/25 proposing £70 billion threshold
- Consultation response deadline
- PRA issues PS22/25 with final policy
- Final policy takes effect, applying new £75 billion threshold and three-year averaging
- 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-compliance risks PRA enforcement, heightened scrutiny, or capital inadequacy findings, but the higher threshold and averaging provide planning relief versus the status quo.
AI-generated analysis. May contain errors or omissions — verify with the
original PRA source
before acting. Full disclaimer.
BankPayment ProviderAll Firms
On 1 July, the PRA and the Bank of England held a roundtable meeting with representatives of non-systemic UK banks and building societies.
Bank