Following an external recruitment process, the Bank of England (the Bank) has appointed Nicholas Segal as Chair of its Enforcement Decision Making Committee (EDMC), and Peter King as Deputy Chair, with effect from 1 August 2026.
AI Analysis
The Bank of England has appointed **Nicholas Segal** as Chair and **Peter King** as Deputy Chair of the Enforcement Decision Making Committee (EDMC), effective 1 August 2026, following expiry of the terms of Sir William Blair and Philip Marsden. This is a governance and enforcement leadership change, not a change to the EDMC Procedures, but compliance teams should anticipate potential shifts in enforcement approach and decision‑making tone across prudential regulation, FMI, resolution, securitisation, wholesale cash distribution, critical third parties and note issuance.
What Changed
- The EDMC now has a new Chair (Nicholas Segal) and Deputy Chair (Peter King), replacing Sir William Blair and Philip Marsden whose terms ended in July 2026.
The appointments are the outcome of an external recruitment process commenced in October 2025, aligned with the EDMC’s governance framework and five‑year renewable term structure.
The scope of the EDMC’s remit continues to cover contested enforcement decisions across the Bank’s statutory regimes: Prudential Regulation, Financial Market Infrastructures, Resolution,...
The EDMC Procedures, published in January 2024, remain the operative framework for how contested enforcement cases are handled, including panel constitution, hearing processes, and decision‑making...
The EDMC continues to operate with functional separation from investigation teams and the Bank’s executive, preserving independence in contested enforcement decisions.
Suggested Considerations
Map all existing and potential enforcement exposures to the EDMC’s statutory remit, covering prudential regulation, FMI, resolution, securitisation, wholesale cash distribution, critical third parties and notes issuance.
Review internal enforcement‑response playbooks to ensure they explicitly recognise the EDMC’s independent role and the January 2024 EDMC Procedures, including how contested cases will be heard and decided.
Update board and senior management briefings on BoE/PRA enforcement to reflect the change in EDMC leadership and likely implications for contested case strategy and settlement versus contest decisions.
Assess ongoing and anticipated enforcement matters for which the firm might contemplate contesting; incorporate the EDMC’s composition and procedures into litigation and regulatory strategy planning.
Train Legal, Compliance and relevant business teams on the practical implications of the EDMC Procedures (panel size, hearing processes, written and oral representations, decision timelines) with scenario‑based exercises for contested cases.
Key Dates
August 2018
- EDMC established by the Court of Directors to provide independent decision‑making in contested enforcement cases and functional separation from investigation teams
January 2024
- EDMC Procedures published, setting out detailed processes for contested enforcement decisions, including panel composition and hearing arrangements
October 2025
- Bank of England commences recruitment for additional EDMC members, including a new Chair and Deputy Chair, to join in summer 2026
11 November 2025
- Closing date for applications for EDMC panel member roles, including potential Chair and Deputy Chair candidates
End of July 2026
- Term of Sir William Blair as EDMC Chair and of Philip Marsden as EDMC Deputy Chair expires
Compliance Impact
Non‑compliance with BoE enforcement requirements within the EDMC’s remit can result in significant financial penalties, public censure, business restrictions and senior management consequences, which will be determined by the EDMC in contested cases. The independent nature of the EDMC heightens the need for robust evidentiary support and procedural discipline where firms decide to contest enforcement actions.
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.
PRA Policy Statement PS18/26 finalises a package of **post‑implementation amendments to Solvency UK reporting and disclosure** and **targeted fixes to the Own Funds framework**, aligned to apply via a single taxonomy update for year‑end 2026 reporting. This matters because insurance compliance teams must adjust regulatory reporting, disclosure processes, and Own Funds permission practices to the updated PRA Rulebook, templates and expectations, including new data requirements for third‑country branches and removal of certain permission requirements.
What Changed
- The PRA finalises amendments to the Reporting Part of the PRA Rulebook to implement post‑implementation clarifications, consistency improvements and data quality enhancements to Solvency UK...
Reporting and disclosure templates and instructions are amended (including XBRL taxonomy changes) to reflect the refined Solvency UK reporting framework and consequential changes from the Own Funds...
The PRA confirms transfer of the Matching Adjustment Asset and Liability Information Return (MALIR) templates from Excel to XBRL submission format, to be incorporated into the single insurance...
The PRA updates Supervisory Statement 7/18 – Solvency II: Matching adjustment, including changes to the Matching Adjustment supplementary information form under Insurance rule permissions and...
The PRA introduces a new collection of projected Financial Services Compensation Scheme (FSCS) liabilities data from third‑country branch undertakings to support enhanced branch supervision.
Suggested Considerations
Review and map existing Solvency UK reporting processes, systems and controls against the amended Reporting Part of the PRA Rulebook and updated templates and instructions to identify required changes for year‑end 2026.
Engage with finance, risk and actuarial functions to implement the new XBRL‑based MALIR submission process, including testing data extraction, validation and filing workflows aligned to the updated insurance taxonomy.
Update internal Own Funds policies, classification procedures and governance documentation to reflect removal of specified permission requirements and the amended Own Funds Part and Group Supervision Part of the PRA Rulebook.
Reconfigure regulatory reporting infrastructure and vendor solutions to adopt the single updated PRA insurance XBRL taxonomy, ensuring all Solvency UK quantitative reporting templates and narrative disclosures are correctly mapped and validated.
For third‑country branch undertakings, design and implement processes to calculate and report projected FSCS liabilities data in line with PRA expectations, including data sourcing, modelling assumptions and internal review controls.
Key Dates
31 December 2024
– Solvency UK reporting and disclosure reforms (phase 2) come into effect for reporting and disclosure reference dates on or after 31 December 2024, including the new Bank of England insurance XBRL taxonomy and removal of the Regular Supervisory Report requirement
Year‑end 2026 reporting (reference date 31 December 2026)
– Implementation of PS18/26 reporting and disclosure changes and Own Funds consequential reporting via a **single updated insurance taxonomy**, covering all amended templates, instructions, MALIR XBRL submissions and new FSCS projected liabilities data for third‑country branches
30 September 2026
– Liquidity reporting requirements for UK Solvency UK insurers with large derivatives and securities financing transaction exposures come into force, requiring firms above specified thresholds to commence new liquidity reporting
31 December 2026DEADLINE
– Revocation of certain Solvency UK Modifications by Consent (including the Reporting MbC) becomes effective; affected third‑country branches meeting premium or provisions thresholds must submit the full branch reporting suite
Compliance Impact
Non‑compliance with the updated reporting, disclosure and Own Funds requirements may result in supervisory findings, requests for remediation, potential use of PRA powers, and could affect the reliability of Solvency Capital Requirement, Own Funds and liquidity assessments. Given the alignment of multiple reforms into a single year‑end 2026 taxonomy update, control failures could have multi‑template, group‑wide impact on regulatory submissions.
The PRA’s LIAC02/26 consultation proposes targeted “low impact” changes to Solvency UK reporting for Lloyd’s syndicates and to PRA liquidity rules linked to Basel 3.1 and the forthcoming Overseas Prudential Requirements Regime. These changes will reduce reporting burdens for Lloyd’s syndicates and refine LCR eligibility/treatment of non‑UK covered bonds and related liquidity provisions, but they require systems, policy and reporting updates ahead of the 2026 year‑end and 2027 implementation.
What Changed
- Lloyd’s syndicates would be removed from the scope of Internal Model Output (IMO) reporting to the PRA via amendments to SS25/15 (Solvency II: Regulatory reporting, internal model outputs),...
SS26/15 (Solvency II: ORSA and the ultimate time horizon – non‑life firms) would be amended to clarify that the option to use IMO outputs in ORSA reporting applies only to firms still required to...
The IM.03 reporting instructions (section “General Comment”) would be amended to align the reporting template guidance with the removal of Lloyd’s syndicates from IMO reporting, avoiding inconsistent...
SS25/15 and SS26/15 would receive non‑substantive drafting updates to improve clarity and consistency, remove outdated EU references, and align terminology and framing with the PRA’s current Solvency...
For 2026 year‑end, Lloyd’s syndicates would no longer be required to submit IMOs to the PRA, with supervisory reliance instead on other Solvency UK reporting streams and data provided through the...
Suggested Considerations
Review existing IMO reporting processes and systems for Lloyd’s syndicates and prepare to decommission IMO submissions to the PRA for 2026 year‑end, ensuring all dependent internal reports and controls are updated.
Map all uses of IMOs in ORSA processes and supervisory reporting for non‑life firms, and update ORSA documentation and methodologies to reflect that the IMO‑based option applies only to firms that remain in scope of IMO reporting.
Update internal reporting manuals and instructions for IM.03 and related Solvency UK templates to reflect the revised PRA wording, removal of outdated EU references, and alignment with the PRA’s Solvency UK framework.
For Lloyd’s managing agents and syndicates, confirm alternative data channels and reporting obligations to the PRA (via Lloyd’s or Solvency UK templates) that will replace the supervisory reliance previously placed on IMO reporting.
Conduct an inventory of non‑UK covered bonds currently recognised as Level 2A HQLA in LCR calculations and assess how the proposed amendments to Article 11(1)(d)(ii) would change eligibility, haircuts, or caps from 1 January 2027.
Key Dates
11 September 2026
- Consultation end date for proposals to amend SS25/15, SS26/15, IM.03 instructions, and the PRA liquidity rules (Liquidity (CRR) Part and LCR (CRR) Part)
31 December 2026DEADLINE
- Proposed implementation date for the SS25/15 and SS26/15 changes and removal of Lloyd’s syndicates from IMO reporting, so syndicates are not required to report IMOs as part of their 2026 year‑end results
01 January 2027
- Proposed implementation date for amendments to the Liquidity (CRR) Part and Liquidity Coverage Ratio (CRR) Part, aligned with Basel 3.1 implementation, CRR restatement in the PRA Rulebook, and the expected entry into force of the Overseas Prudential Requirements Regime (Credit Institutions and Investment Firms) Regulations 2026
Compliance Impact
Non‑compliance would primarily manifest as defective regulatory reporting and mis‑stated LCR calculations, exposing firms to PRA supervisory challenge, potential remedial actions, and in serious cases liquidity add‑ons or restrictions on business activities. For Lloyd’s syndicates, failure to align with the new reporting model could also create data gaps in supervisory engagement and increase scrutiny under the PRA–Lloyd’s Cooperation Agreement.
The PRA’s CP12/26 proposes to codify and expand guidance on amalgamations and transfers of insurance friendly societies under Part VIII of the Friendly Societies Act 1992, aligning it more closely with its established approach to insurance business transfers. The consultation matters for compliance teams because it clarifies the PRA’s expectations, evidential standards, and discretionary powers (including member vote dispensations and independent actuarial reports), which will shape how friendly society restructurings must be planned, documented, and executed.
What Changed
- The PRA proposes a more detailed, codified description of the end‑to‑end Part VIII process for friendly society amalgamations and transfers, organised into stages such as planning and preparation,...
The PRA intends to update and integrate its Statement of Policy on insurance business transfers to explicitly cover friendly society amalgamations and transfers under the Friendly Societies Act 1992,...
For transfers, the PRA sets out circumstances in which it may exercise its statutory discretion to dispense with the requirement for the transferee friendly society to hold a member vote, subject to...
The PRA proposes to clarify when it may direct the transferor and/or transferee to appoint an independent actuary to report on the proposed transfer’s effects on members and policyholders, including...
Firms undertaking a Part VIII transfer will be expected to provide robust actuarial analysis and supporting evidence demonstrating that statutory preclusion grounds are not met and that the transfer...
Suggested Considerations
Map all current and planned amalgamations or transfers involving friendly societies against the proposed five‑part process (planning, analysis, member engagement and votes, application/notifications/representations, confirmation meetings) and identify procedural and evidential gaps.
Review internal policies, governance frameworks, and transaction playbooks for friendly society restructurings to ensure they reflect the PRA’s codified expectations under Part VIII of the Friendly Societies Act 1992, including early regulatory engagement and documentation standards.
Develop or enhance internal guidance for actuaries and finance teams on the required actuarial analysis for Part VIII transfers, ensuring the ability to evidence that preclusion grounds are not met and that the transaction is in the interests of members and policyholders.
Implement procedures to identify all classes of members and policyholders affected by proposed amalgamations or transfers, assess whether their existing terms and conditions are preserved or materially changed, and document the implications for benefit levels and distribution.
For partial transfers, establish a formal framework to assess and document how the interests of members remaining with the transferor society are considered, including any continuing obligations, capital support, and benefit expectations.
Key Dates
TBD (est. late 2026 / early 2027)
– Expected PRA policy statement and finalised amendments to the Statement of Policy on insurance business transfers, following consultation feedback (exact date not specified in the CP)
Early July 2026
– PRA publishes CP12/26 “Insurance friendly societies, amalgamations and transfers”, launching the consultation on proposed codified guidance and Statement of Policy amendments
Compliance Impact
Non‑compliance with the clarified PRA expectations and statutory requirements under Part VIII of the Friendly Societies Act 1992 can result in refusal or delay of transaction confirmation, increased supervisory scrutiny, and potential member or policyholder detriment, reputational damage, and enforcement risk. Given the PRA’s focus on safety, soundness, and policyholder protection, poorly evidenced or poorly governed transactions will face a materially higher risk of challenge and failure.
The Prudential Regulation Authority (PRA) has imposed a financial penalty of £4,165,000 on HDI Global SE in connection with the submission of incorrect data to the PRA.
AI Analysis
The PRA has fined HDI Global SE £4,165,000 for multiple instances of inaccurate reporting of Financial Services Compensation Scheme (FSCS) liabilities and FSCS fee tariff data between August 2021 and August 2024, including defective “remediation” submissions. The case underscores that FSCS data is treated as prudentially critical, and that failures in governance, controls, and technical understanding of PRA Rulebook requirements will be pursued as breaches of Fundamental Rules 2 and 6, with substantial financial and supervisory consequences.
What Changed
- The PRA has explicitly reinforced that FSCS Liabilities and FSCS Fee Tariff data are core prudential reporting metrics, and misreporting them may both impede risk assessment and cause underpayment...
The enforcement action clarifies that failures to consult the PRA Rulebook and applicable guidance on FSCS coverage and fee tariff methodologies constitute a breach of Fundamental Rule 2 (due skill,...
The PRA has signalled that the absence of effective written processes for calculating regulatory data, and lack of clear accountability, internal oversight, and challenge over those calculations,...
The case demonstrates that remediation submissions are subject to the same accuracy and governance expectations as original returns, and that errors in purported remediation will be treated as...
The PRA’s Early Account Scheme (EAS), formally incorporated into its enforcement policy in January 2024, is now clearly positioned as a mechanism that can materially reduce penalties where firms...
Suggested Considerations
Review and map all FSCS Liabilities and FSCS Fee Tariff reporting obligations under the PRA Rulebook and applicable guidance, ensuring the firm’s methodology aligns with regulatory definitions of FSCS-covered liabilities.
Conduct a detailed end-to-end review of regulatory reporting processes for FSCS data, including data sourcing, calculations, validations, and submission workflows, to identify and remediate control weaknesses.
Develop and document formal, robust written procedures that govern the calculation and validation of FSCS Liabilities and FSCS Fee Tariff data, including change-control processes for methodologies.
Assign clear ownership and accountability for FSCS-related reporting within the firm’s governance framework, ensuring named individuals or functions are responsible for accuracy, completeness, and timely submission.
Strengthen internal oversight, challenge and review mechanisms over prudential and FSCS-related reporting, including regular independent checks by risk, compliance or internal audit.
Key Dates
August 2021
- Start of the relevant period during which HDI Global SE submitted incorrect FSCS Liabilities and FSCS Fee Tariff data to the PRA
Summer 2023
- By this point, HDI Global SE had still not checked the PRA Rulebook or guidance on FSCS coverage and fee tariff methodology, illustrating the duration of governance and diligence failures
January 2024
- The Early Account Scheme (EAS) becomes part of the Bank of England’s enforcement policy for PRA firms and FMIs
August 2024
- End of the relevant period of misreporting, including errors in data submitted as purported remediation of earlier incorrect returns
November 2024
- The Bank of England updates its statutory statements of policy and procedure on enforcement, setting out the PRA’s approach to exercising enforcement powers under FSMA 2000
Compliance Impact
Non-compliance with PRA expectations on FSCS data accuracy and governance can result in multi-million-pound financial penalties, public enforcement action, and findings of breaches of Fundamental Rules, with knock-on impacts on supervisory intensity and reputational risk. Failures may also lead to underpayment of FSCS levies, with potential for backdated levy demands and broader scrutiny of the firm’s prudential reporting framework.
Innovative new proposals aim to establish the UK as a centre for the fast-growing captive insurance market.
AI Analysis
The PRA and FCA have launched a consultation on a **bespoke UK regime for single‑parent captive insurers**, featuring streamlined authorisation, reduced capital and reporting, and exclusion from Solvency UK and Consumer Duty. The regime, targeted to go live in **summer 2027**, materially changes both prudential and conduct expectations for UK captives and creates a new, lighter regulatory pathway that groups will need to understand and factor into risk‑financing, governance, and group structuring decisions.
What Changed
- Introduction of a tailored regulatory framework for single‑parent captive insurers in the UK, distinct from the regimes applicable to traditional insurers and reinsurers.
Creation of a streamlined dual PRA/FCA authorisation process for captives, with an explicit target decision timeline of 4–6 weeks from application.
Exclusion of captives from Solvency UK requirements, with a move to a separate, flexible capital resources framework rather than Solvency II‑style minimum capital requirements.
Exclusion of captives from the FCA Consumer Duty, recognising that captives primarily insure intra‑group risks and have limited direct retail customer exposure.
Introduction of proportionately lower capital requirements for captives, reflecting their lower risk profile and group‑risk‑financing purpose.
Suggested Considerations
Assess whether existing or planned group risk‑financing strategies would benefit from establishing a UK single‑parent captive under the proposed regime and document the strategic rationale.
Map current and planned intra‑group insurance and reinsurance arrangements, including any employee benefits‑related policies, to confirm which risks can be written directly and which must only be written on a reinsurance basis.
Engage early with internal stakeholders (risk, treasury, legal, tax, and senior management) to determine preferred captive structures (standalone vs future PCC) and governance arrangements aligned with PRA expectations.
Prepare to participate in the PRA and FCA consultations by drafting detailed, technical responses on authorisation processes, capital methodologies, reporting templates, and conduct requirements for captives.
Review existing Solvency UK and Consumer Duty compliance frameworks and identify which elements would no longer apply to captives under the proposed regime, while ensuring that any remaining protections and safeguards are maintained where appropriate.
Key Dates
Summer 2026
– PRA and FCA consultations expected to be issued on detailed rules for the new UK captive insurance regime
16 June 2026
– PRA speech by Shoib Khan outlining policy approach, boundaries of captive activity, and expectation of a consultation in summer 2026
14 October 2026
– Consultation closing date for responses to the PRA/FCA captive regime proposals
Summer 2027
– Target **launch of the new captive insurance regime**, following consideration of consultation feedback and finalisation of PRA/FCA rules and guidance
Mid‑2027
– Consistent target implementation window indicated in government and regulator communications for the new captive framework to become operational
Compliance Impact
Non‑compliance with the bespoke captive regime (for example, writing prohibited direct employee benefits business, breaching capital expectations, or misusing the captive perimeter) may result in authorisation refusal, supervisory intervention, restrictions on business, or enforcement action impacting both the captive and its parent group. Compliance teams in affected groups will need to treat the regime as a material prudential and conduct change, with direct implications for group risk management, governance, and regulatory relationships.
The PRA’s CP10/26 proposes to delete the Continuity of Provision of Services Chapter in the Ring‑fenced Bodies Part of the PRA Rulebook and make consequential amendments, effectively shifting continuity‑of‑services expectations for ring‑fenced bodies onto the broader operational continuity / resolution framework. For compliance teams, this is a material rationalisation of overlapping rule sets that will require careful mapping of existing ring‑fencing service‑continuity controls into the PRA’s operational continuity and resilience expectations, and engagement with the consultation by the response deadline.
What Changed
- The PRA proposes to delete in full the Continuity of Provision of Services Chapter in the Ring‑fenced Bodies Part of the PRA Rulebook, removing the specific ring‑fencing continuity‑of‑services...
The PRA will make consequential amendments to the Ring‑fenced Bodies Part to remove or adjust cross‑references, defined terms and obligations that are linked to the deleted Continuity of Provision of...
The proposal effectively retires the bespoke continuity‑of‑services construct that was introduced when ring‑fencing was implemented (including detailed constraints on termination, suspension or...
The consultation paper explains how the PRA intends to align ring‑fenced bodies’ continuity‑of‑services expectations with existing supervisory statements on operational continuity in resolution (for...
The PRA invites stakeholders to comment on whether deleting the Continuity of Provision of Services Chapter, and relying on the broader operational continuity regime, still adequately protects the...
Suggested Considerations
Assess the current use of the Continuity of Provision of Services Chapter in the Ring‑fenced Bodies Part within your firm’s ring‑fencing policies, procedures, contracts and governance, and identify all controls that explicitly rely on those rules.
Prepare and submit a considered response to CP10/26 by 14 October 2026, addressing the practical impact of deleting the Continuity of Provision of Services Chapter, any residual areas of concern, and suggestions for guidance or transitional arrangements.
Coordinate with group entities acting as permitted suppliers or critical service providers to ensure their OCIR documentation, service catalogues, TSAs and liquidity arrangements remain aligned with the ring‑fenced body’s continuity requirements in the absence of the deleted chapter.
Monitor for the subsequent PRA policy statement that will follow CP10/26, and be prepared to implement any final rule changes, transitional provisions or clarifications on how ring‑fencing continuity expectations intersect with OCIR and operational resilience regimes.
Key Dates
14 October 2026DEADLINE
- Deadline for submitting responses to PRA Consultation Paper CP10/26 on the deletion of the Continuity of Provision of Services Chapter and related changes to the Ring‑fenced Bodies Part
Compliance Impact
Non‑compliance would primarily manifest as weaknesses in the continuity of core services and intra‑group service arrangements rather than direct breaches of the deleted rules, potentially leading to PRA supervisory findings, remediation requirements and heightened capital or resolvability expectations. Failure to realign ring‑fencing continuity controls with the PRA’s operational continuity and resilience framework could also impact resolvability assessments and increase the risk of adverse supervisory interventions in stress or resolution.
The PRA has issued Consultation Paper CP11/26 proposing a **tailored prudential regime for UK captive insurance undertakings**, with responses due by 14 October 2026. This matters for compliance teams in insurance groups and large corporates because it will create a distinct authorisation and supervisory framework for captives under Solvency UK, potentially changing capital, governance, and reporting expectations and opening a new strategic option to domicile captives in the UK.
What Changed
- The PRA proposes to establish a dedicated UK regulatory regime for captive insurers, separate from the standard Solvency UK treatment for commercial (non‑captive) insurers.
Captive insurers would benefit from proportionate prudential requirements (for example simplified capital, reporting, and risk management expectations) reflecting their limited and group-focused risk...
The consultation seeks views on eligibility criteria for captives, likely including ownership (group‑owned), purpose (insuring or reinsuring parent/group risks), and restrictions on third‑party...
PRA proposes a UK authorisation and licensing pathway specifically tailored to captives, with adjusted expectations for business plans, risk appetites, and use of reinsurance and fronting structures.
The regime is intended to sit within Solvency UK rather than as a completely separate legislative framework, implying changes to the PRA Rulebook and supervisory statements rather than primary...
Suggested Considerations
Review CP11/26 in detail and perform an internal impact assessment on how the proposed captive regime would affect your group’s current or planned captive insurance structures, including domicile and regulatory capital profile.
Identify whether any existing insurance entities within the group may fall within the PRA’s proposed definition of a captive and assess whether reclassification would be beneficial or would trigger additional compliance work.
Prepare and submit a coordinated consultation response by 14 October 2026, addressing eligibility criteria, proportionality of capital and reporting requirements, and any operational or tax implications for your captive strategy.
Map existing governance, risk management, and internal control frameworks for captives against PRA’s proposed expectations and identify gaps that would need remediation ahead of the regime’s expected go‑live in mid‑2027.
Engage with group legal, tax, and treasury teams to evaluate whether onshoring an offshore captive to the UK, or establishing a new UK captive, becomes strategically attractive under the tailored regime, and model scenarios accordingly.
Key Dates
Summer 2026
– PRA (and FCA) indicated they would consult on a new UK captive insurance regime as part of their 2026 supervisory priorities and joint statements
14 October 2026DEADLINE
– Deadline for responses to CP11/26 “A tailored regime for captive insurance”
Mid 2027
– Target implementation date for the new UK captive insurance regime, as indicated in prior PRA policy communications and government consultation responses
Compliance Impact
Non‑compliance with the eventual captive regime (for example mis‑classification of entities, inadequate capital or governance relative to PRA expectations) could lead to authorisation issues, supervisory interventions, restrictions on business, or requirements to restructure existing captive arrangements. Given the regime will sit within Solvency UK, failures may also affect group capital positions and broader regulatory assessments of risk management adequacy.
PRA Policy Statement PS16/26 finalises rule changes across multiple CRR-related parts of the PRA Rulebook and Pillar 2 materials to align UK prudential rules with HM Treasury’s new Overseas Prudential Requirements Regime (OPRR), effective 1 January 2027. The changes are primarily technical and clarificatory but have direct implications for how UK banks and PRA-designated investment firms treat and report overseas exposures, including institutions, public sector entities, covered bonds, and large exposures, once CRR equivalence provisions are replaced by the OPRR.
What Changed
- The PRA Rulebook is amended across core CRR Parts (including Glossary, Credit Risk – General Provisions, Standardised Approach, IRB, Credit Risk Mitigation, Securitisation, Counterparty Credit...
Under the Standardised Approach to credit risk, the treatment of exposures to overseas credit institutions and designated investment firms is aligned to OPRR designations so that favourable...
The PRA restates and preserves the 100% risk-weight requirement for exposures to overseas public sector entities (PSEs) in non-designated (non‑equivalent) jurisdictions, maintaining alignment with...
Large Exposures rules are amended so that exposures to overseas credit institutions and investment firms qualify as “institution” exposures only where HM Treasury has determined the jurisdiction’s...
Suggested Considerations
Review and update internal capital models and Standardised Approach calculations for credit risk to ensure the classification and risk‑weighting of overseas exposures reflect the new OPRR‑linked definitions (e.g. treatment as “institutions” versus “corporates”) from 01 January 2027.
Update ICAAP methodologies, risk appetite statements, and SREP documentation (including for SDDTs) to reflect the continued 100% risk weight for overseas public sector entities in non‑designated jurisdictions and any changes to the treatment of overseas covered bonds, institutions, and exchanges.
Amend Pillar 2 reporting processes and templates, including FSA076 Pillar 2 Credit Risk Standardised Approach returns, to align data capture and reporting with the revised definitions, risk weights, and categorisation of overseas exposures under the PRA’s updated Rulebook and Statements of Policy.
Key Dates
Early July 2026
- PRA publishes PS16/26, confirming final rule changes to accommodate the OPRR and indicating that final rules have been made on the understanding that the OPRR statutory instrument will be made and in force prior to 1 January 2027
Q3 2026
- HM Treasury is expected to make the OPRR statutory instrument, with the PRA indicating it will amend or revoke its final rules if the instrument is amended prior to being made or is not made
02 July 2026
- HM Treasury lays before Parliament the Overseas Prudential Requirements Regime (Credit Institutions and Investment Firms) Regulations 2026, which will replace relevant UK CRR equivalence provisions as the statutory OPRR framework
01 January 2027
- The Overseas Prudential Requirements Regime (Credit Institutions and Investment Firms) Regulations 2026 come into force and the PRA’s new rules under PS16/26 take effect, coinciding with the PRA’s broader implementation of the Basel 3.1 standards; from this date, UK CRR equivalence provisions are revoked and replaced by the OPRR framework and associated PRA Rulebook changes
Compliance Impact
Non-compliance could result in mis-stated risk-weighted assets, incorrect large exposure reporting, and flawed ICAAP submissions, exposing firms to supervisory findings, remediation requirements, and potential capital add-ons. Given the changes apply at the core of credit risk, large exposures, and Pillar 2 frameworks, failure to implement them properly may materially affect firms’ regulatory capital ratios and their ability to demonstrate robust prudential management.
The FCA has proposed a package of reforms that would tailor requirements proportionately for asset managers, cut costs for firms and give better data to supervise the sector more effectively. A large share of the £128m-a-year savings are expected to come from simpler Fund Reporting for Asset Management Entities (FRAME) requirements. These would be tailored to the specific circumstances of UK industry, delivering better data to make regulation more efficient.The package would also modernise an...
The Money Markets Committee is a forum for market participants and authorities to discuss the UK unsecured deposits and funding market and securities lending and repo markets.
PS17/26 confirms the Bank of England’s and PRA’s final **fees and levies rates for 2026/27**, including a 3% overall increase in the Bank’s core levies (within CPI) but a small **reduction** in the PRA levy and a clarified mechanism for the “Cost of Transition” away from the legacy Cash Ratio Deposit (CRD) model.
For compliance and finance teams in PRA‑regulated firms, this directly affects **prudential fee budgets, cost allocation models, and forecasting**, and requires understanding of the new transition adjustment that can materially change the Bank of England Levy as interest rates move.
What Changed
- The Bank’s core levies (Bank of England Levy, PRA Levy, FMI Levy, and other core levies) are constrained to grow by no more than CPI in 2026/27, with the Bank’s operating costs and associated core...
Within this 3% cap, the Bank of England Levy (operational policy cost component) is budgeted to increase from £328 million (2025/26 budget) to £353 million in 2026/27, an 8% year‑on‑year rise driven...
The PRA Levy is set to decrease slightly from £350 million (2025/26) to £345 million in 2026/27, a 1% reduction reflecting the PRA’s lower overall Total Funding Requirement and a different investment...
The FMI Levy is budgeted to increase from £17 million (2025/26 budget) to £18 million in 2026/27, representing a 3% rise in costs for financial market infrastructure supervision.
Overall, the Bank’s core levies (Bank of England Levy, PRA Levy, FMI Levy) are forecast to move from £695 million (2025/26 budget) to £715 million in 2026/27, a £20 million (3%) increase within the...
Suggested Considerations
Review the PS17/26 final numbers and tables to identify your firm’s applicable PRA fee‑block(s), the applicable Bank of England Levy and FMI Levy components, and quantify the 2026/27 impact relative to 2025/26.
Update internal regulatory fee and levy forecasts, budgets, and accrual models to incorporate the 3% increase in core Bank levies, the 1% reduction in the PRA Levy, and any firm‑specific changes driven by business volumes or fee‑block allocations.
For treasury and finance teams, model the Cost of Transition by stress‑testing scenarios where Bank Rate is above or below the legacy CRD gilt return, to understand potential upward or downward adjustments to the Bank of England Levy and reflect this in multi‑year financial planning.
Ensure that board and relevant governance committees (e.g. Audit Committee, Risk Committee) are briefed on the 2026/27 levy changes, including the Cost of Transition mechanism, and that any material budget variances versus prior plans are explained and approved.
For firms previously affected by the CRD scheme, update internal regulatory funding documentation and policies to remove references to CRD funding and to describe the new levy‑based and Cost of Transition arrangements, ensuring consistency with PS17/26 and the 2024 Bank of England Levy Framework.
Key Dates
March 2024
– Legacy Cash Ratio Deposit (CRD) non‑interest‑bearing balances are converted into remunerated central bank reserves and the corresponding gilts portfolio is transferred to the Bank’s Banking Department, triggering the start of the Cost of Transition mechanism
17 April 2026
– PRA publishes CP7/26 “Regulated fees and levies: Rates proposals 2026/27”, consulting on draft fee rates, AFR and TFR for the 2026/27 fee year
15 May 2026DEADLINE
– Deadline for firms to submit consultation responses on CP7/26 to the PRA
Early July 2026
– PRA publishes PS17/26 setting the final regulated fees and levies, including final 2026/27 PRA Levy, FMI Levy, Bank of England Levy amounts, and the application of the Cost of Transition mechanism for the 2026/27 fee year
From July 2026
– FCA/PRA joint invoicing cycle for 2026/27 periodic fees and levies begins; firms start to receive invoices incorporating the PRA Levy, Bank of England Levy, FMI Levy, and related statutory levies for the 2026/27 fee year
Compliance Impact
Non‑compliance with PRA and Bank of England fee and levy obligations, including late or non‑payment, can result in surcharges, debt collection, restrictions on permissions, and potentially enforcement action, with reputational and prudential supervision consequences.
Our Financial Policy Committee (FPC) meets to identify risks to financial stability and agree policy actions aimed at safeguarding the resilience of the UK financial system.
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.
Firms supporting people to buy, trade and hold crypto will need to meet clear standards under landmark rules set out by the FCA. All firms must meet financial resilience requirements including capital and stress testing. The FCA is also introducing new market integrity rules covering areas such as insider trading and market manipulation.The new framework also sets out specific rules for stablecoins, a type of cryptoasset designed to maintain a stable value, typically by being linked to a curr...
The Bank of England and the FCA have published a joint approach setting out how they and where relevant other authorities will work together to regulate systemic stablecoin issuers in the UK.It explains how responsibilities will be split between the authorities, and how UK stablecoin issuers may move from FCA supervision to joint regulation once recognised as systemic by HM Treasury.The approach aims to provide clarity and predictability for firms as the market develops.Read the paper
AI Analysis
The FCA and Bank of England have set out a joint supervisory model for **systemic stablecoin issuers**, clarifying how firms will move from FCA-only oversight to joint regulation once HM Treasury designates them as systemic. This matters because UK‑based and non‑UK stablecoin issuers used for payments will face distinct prudential, conduct and structural requirements depending on whether they are non‑systemic (FCA only) or systemic (Bank of England plus FCA), with a managed transition between regimes.
What Changed
- UK stablecoin issuance will be subject to a dual regulatory regime: non‑systemic stablecoins will be supervised solely by the FCA, while systemic stablecoins used for payments will be jointly...
Issuing a qualifying sterling‑denominated stablecoin in the UK will become a regulated activity, requiring FCA authorisation for non‑bank issuers and bringing them within the FCA’s prudential,...
HM Treasury will apply statutory systemic tests under the Banking Act (e.g. scale, interconnectedness, substitutability, impact on confidence in sterling) to decide whether a stablecoin payment...
Once recognised as systemic, stablecoin issuers and systemic payment system providers will fall under the Bank of England’s remit under the Banking Act 2009, including powers to obtain information,...
Systemic sterling‑denominated stablecoin issuers will be required to maintain backing reserves equal to all outstanding coins, with backing assets held on statutory trust in the UK and ring‑fenced...
Suggested Considerations
Map all existing and planned sterling‑denominated stablecoin products against the UK’s systemic and non‑systemic regimes and assess whether their intended use in UK payments could trigger HM Treasury systemic recognition.
Initiate or update FCA authorisation applications for stablecoin issuance and cryptoasset custody activities, ensuring business models, governance and safeguarding arrangements align with CP25/14 and the forthcoming stablecoin regime.
Design and implement reserve‑management frameworks capable of maintaining backing assets equal to outstanding coins, in the proposed 70/30 mix between short‑term UK government debt and Bank of England deposits, with appropriate stress testing and liquidity risk oversight.
Establish statutory trust and segregation structures for backing assets and liquid‑asset reserves, including appointing UK‑authorised third‑party custodians and aligning documentation with FCA client‑asset‑style protections and coinholder proprietary claims.
Develop capital planning processes and ICAAP‑style assessments to meet the Bank of England’s requirements for capital against general business risk and dedicated reserves for financial risk and wind‑down costs.
Key Dates
10 November 2025
- Bank of England consultation paper issued on the proposed regulatory framework for sterling‑denominated systemic stablecoins and systemic payment system operators
Late 2026
- Bank of England intends to finalise the Code of Practice and supporting materials by the end of 2026, confirming the prudential and structural regime for systemic stablecoins
From 2026
- UK introduces new regulatory authorisation requirements for stablecoin issuers, including FCA authorisation for qualifying issuance and custody activities
10 February 2026
- Consultation period closes for the Bank of England’s systemic stablecoin regime proposals
June 2026
- Bank of England publishes its policy statement and draft Code of Practice for systemic stablecoin issuers, setting out detailed prudential and backing‑asset rules and confirming joint work with the FCA on an end‑to‑end regime
Compliance Impact
Non‑compliance with the emerging stablecoin regime may result in refusal of authorisation, enforcement directions, restrictions on issuance volumes, and potential wind‑down of stablecoin products, with significant balance‑sheet, reputational and operational consequences. Systemic issuers face heightened supervisory scrutiny and Banking Act enforcement powers, making early alignment with prudential, safeguarding and governance expectations critical.
Statistical Notices update the definitions and guidance contained in the Banking Statistics Yellow Folder
AI Analysis
The Bank of England has announced changes to the **Form PL (Profit and Loss) definitions**, principally clarifying the treatment of tax line item PL16 / PL.01.01.01 C0010 R1600 to align more closely with ONS UK National Accounts requirements. This matters for compliance and regulatory reporting teams because it affects how income, expenditure and tax on production are classified and reported from Q1 2027, with downstream impacts on UK National Accounts, Balance of Payments statistics and firms’ regulatory reporting controls.
What Changed
- The Bank of England will update the Form PL definitions to improve consistency and alignment with the ONS UK National Accounts requirements, specifically for income and expenditure reporting.
The definition and reporting guidance for tax (PL16 / PL.01.01.01 C0010 R1600) are being revised to clarify the treatment of items classified as taxes on production and related charges.
The updated definitions will apply to all Form PL line items, with particular emphasis on ensuring more precise classification of tax-related items within profit and loss reporting.
The Bank of England does not anticipate major changes in reported figures but expects improved clarity and consistency in how firms map internal accounting data to Form PL categories.
The updated definitions will replace the current Form PL guidance and become the operative standard for all reporting institutions from the Q1 2027 reporting period.
Suggested Considerations
Review the updated Form PL definitions in full once they are published on 31 July 2026 to understand all changes to income, expenditure and tax classification.
Map the revised Form PL tax definition (PL16 / PL.01.01.01 C0010 R1600) to internal chart of accounts and tax reporting structures, ensuring correct identification of taxes on production and related charges.
Update internal regulatory reporting systems, data transformation rules and validation checks to reflect the new Form PL definitions ahead of the Q1 2027 reporting period.
Revise internal reporting policies, procedures and documentation for Form PL to incorporate the updated tax treatment and any other definitional changes.
Train finance, regulatory reporting and data teams on the revised Form PL guidance, with particular focus on the redefined tax items and their distinction from other tax and fee categories.
Key Dates
31 July 2026
- Updated Form PL definitions are scheduled to be published by the Bank of England
Q1 2027
- First reference period for which the updated Form PL definitions are effective
May 2027DEADLINE
- Submission deadline for Q1 2027 Form PL reporting using the revised definitions and tax treatment
Compliance Impact
Non-compliance with the updated Form PL definitions from Q1 2027 would constitute misreporting to the Bank of England, potentially triggering supervisory scrutiny, data quality queries and remediation requirements. Persistent or material misclassification of tax and income items could affect the integrity of UK macroeconomic statistics and lead to heightened regulatory attention on a firm’s reporting controls.
The Cost Benefit Analysis (CBA) Panel is a statutory panel established to provide advice to the PRA and the Bank on the preparation of CBA. The Panel provides independent input to the PRA’s and the Bank’s CBAs, helping to support increased transparency and scrutiny of their policymaking. This report covers the period from 1 March 2025 to 28 February 2026.
This Enforcement Decision Making Committee (EDMC) annual report covers the period of 1 March 2025 to 28 February 2026.
AI Analysis
The PRA’s EDMC annual report confirms that contested enforcement decisions remain structurally separated from investigation teams and executive decision-makers, with the EDMC acting as the independent final administrative decision-maker before any Upper Tribunal referral. For compliance teams, the key message is not a new rule change, but a reminder that PRA enforcement cases are handled through a formal, disclosure-heavy process with written and oral representations and an independent review of settled cases.
What Changed
- The EDMC completed its annual reporting cycle for the period 1 March 2025 to 28 February 2026, confirming the continued operation of the PRA’s contested-case decision framework.
The report confirms that the EDMC continues to provide functional separation between investigation/enforcement staff and decision-makers in PRA contested enforcement cases.
The report confirms that the EDMC’s role covers enforcement cases under the Bank’s statutory regimes for prudential regulation, financial market infrastructure, resolution, securitisation, wholesale...
The EDMC confirms that contested enforcement decisions are made independently, with disclosure of relevant material and the opportunity for both written and oral representations.
The EDMC confirms that its decision is the final stage of administrative decision-making in contested PRA enforcement cases, after which the subject may refer the matter to the Upper Tribunal.
Suggested Considerations
Review your firm’s PRA enforcement response plan to ensure it supports rapid collection, review, and production of material that may be disclosed in a contested case.
Ensure legal and compliance teams are prepared to make both written and oral representations to the EDMC if the firm becomes subject to a contested enforcement matter.
Confirm that internal governance provides for independent escalation and board-level oversight when a PRA investigation enters the decision stage.
Maintain an updated settlement strategy for PRA matters, including documented positions on fairness, scope of admissions, and mitigation, because the EDMC may review settlement processes retrospectively.
Map exposure across all PRA enforcement regimes relevant to the business, including prudential regulation, FMI, resolution, securitisation, wholesale cash distribution, critical third parties, and S&NI banknote matters.
Key Dates
01 March 2025
- Start of the reporting period covered by the EDMC annual report
Summer 2026DEADLINE
- Remaining EDMC members, including the incoming Chair and Deputy Chair, are due to be appointed
28 February 2026
- End of the reporting period covered by the EDMC annual report
28 February 2026
- As of this date, the PRA enforcement team was overseeing five cases, including investigations into five firms and five individuals
June 2026
- The EDMC annual report for 2025/26 was published
Compliance Impact
The report reinforces that PRA enforcement remains procedurally rigorous and independent, so weaknesses in document preservation, internal escalation, or representation strategy can materially worsen outcomes in contested cases. While no new enforcement rule is introduced here, firms should treat the report as evidence that the PRA’s decision-making architecture is stable, formal, and capable of escalating to tribunal litigation if matters are not resolved early.
The Bank of England and the Prudential Regulation Authority (PRA) have published their annual reports. The PRA report includes information on our activities for the year ended 28 February 2026.
Given at the 5th Conference on Financial Law and Regulation, University of Leeds School of Law, 24 June 2026
AI Analysis
David Chaplin says the PRA is seeing a “sea change” in enforcement cases because firms and individuals are now engaging earlier, identifying breaches proactively, and remediating sooner. This matters because the PRA is formalising a more efficient investigative model that rewards early factual cooperation and early admissions, which can materially affect settlement outcomes and overall enforcement exposure.
What Changed
- The PRA is now explicitly encouraging earlier engagement by investigation subjects, including proactive identification, acknowledgement, and remediation of breaches.
The familiar enforcement pattern is changing from a late-stage admission model toward a front-loaded investigative model in which firms provide information earlier in the process.
The PRA’s enforcement approach now places greater emphasis on written factual accounts and supporting materials during the initial investigative stage.
Firms that participate early and make early admissions may obtain enhanced settlement discounts, while non-participants remain on a lower discount path.
The Bank says this is not a new policy launch but an explanation of how the existing approach is operating in practice across live cases.
Suggested Considerations
Review current investigation-response procedures to ensure the firm can produce a factually complete written account and supporting evidence at short notice.
Build escalation protocols that trigger early internal fact-finding when a potential prudential breach is identified.
Train relevant staff to distinguish between cooperation, factual admissions, and without-prejudice settlement positions so that engagement does not inadvertently prejudice legal strategy.
Reassess whether current incident-management playbooks are aligned with the PRA’s expectation of early candour and remediation.
Ensure legal, compliance, and business stakeholders can rapidly agree on breach acknowledgment, remediation steps, and document preservation.
Key Dates
May 2023
- The PRA published Consultation Paper CP9/23, which proposed changes later reflected in the updated enforcement approach
30 January 2024
- The Bank of England unveiled changes to the PRA’s enforcement approach, including the Early Account Scheme and the Enhanced Settlement Discount
24 June 2026
- David Chaplin delivered the speech at the 5th Conference on Financial Law and Regulation at the University of Leeds School of Law
Compliance Impact
Non-compliance with the PRA’s expectations can increase the likelihood of a more intrusive investigation, weaker settlement leverage, and exposure to formal sanctions, including censures, financial penalties, suspensions, and individual prohibitions. The speech indicates that firms that fail to engage early may lose access to the practical benefits now emerging in enforcement handling.
The Bank of England has today published its policy statement and draft Code of Practice (rules) for systemic stablecoin issuers.
AI Analysis
The Bank of England has issued a policy statement and draft **Code of Practice** setting out the prudential and conduct framework for **sterling‑denominated systemic stablecoin issuers**, replacing earlier consultation proposals with a more business‑viable model. For compliance teams, the key changes are a revised backing‑asset composition (70% gilts / 30% BoE deposits vs the previously consulted 60%/40%) and a shift from **per‑holder limits** to a **£40 billion per‑coin issuance guardrail**, plus a clear timetable to finalise rules by end‑2026 and enable UK‑regulated systemic stablecoins from 2027.
What Changed
- The Bank of England has published a policy statement “Sterling‑denominated systemic stablecoins” (22 June 2026) and a draft Code of Practice that will constitute the primary rulebook for systemic...
The regime applies only to systemic sterling‑denominated stablecoins used for UK payments, i.e. stablecoins recognised as systemic under Banking Act 2009 tests where disruption could threaten UK...
The previous proposal that at least 40% of backing assets be unremunerated central bank deposits and up to 60% in short‑term UK government debt has been revised so that up to 70% of backing assets...
Backing assets must remain highly liquid and low‑risk, with central bank deposits used explicitly to support prompt redemption in stress, while the expanded gilt component is intended to improve the...
The BoE has dropped the earlier concept of temporary per‑holder limits (for example, £20,000 per individual and £10 million per business that were consulted on in 2025) and replaced them with a...
Suggested Considerations
Conduct a regulatory perimeter and recognition analysis to determine whether any issued or planned sterling‑denominated stablecoin could meet the Banking Act 2009 systemic tests and therefore fall under the BoE systemic stablecoin regime.
Review and update treasury and investment policies for stablecoin backing assets to ensure the portfolio structure can comply with the revised requirement of up to 70% short‑term UK government debt and the remainder in BoE deposits.
Perform detailed liquidity and redemption stress‑testing to evidence that central bank deposits and gilt portfolios can support prompt redemption under extreme but plausible scenarios while remaining within the £40 billion issuance guardrail.
Re‑calibrate business plans and revenue models for systemic stablecoin issuance to reflect the increased allowable share of interest‑bearing gilts, the absence of per‑holder limits, and continued constraints on paying interest to coinholders.
Design and implement governance and risk‑management frameworks that meet BoE expectations for systemic payment systems, including Board‑level oversight, risk appetite for digital money, and clear accountability for prudential and operational risks.
Key Dates
2024
- UK Government publishes its National Payments Vision, which provides the policy backdrop for a UK regime on digital money, including stablecoins
10 November 2025
- BoE consultation paper “Proposed regulatory regime for sterling‑denominated systemic stablecoins” is published, setting out the initial framework, including 60% cap on gilts and per‑holder limits
10 November 2025
- BoE Financial Stability Paper on “The role of holding limits for sterling‑denominated systemic stablecoins and a potential digital pound” is published, exploring the macro‑prudential rationale for quantitative limits
End of 2026
- BoE intends to finalise the Code of Practice and supporting rules for systemic sterling‑denominated stablecoins, following the consultation feedback
02 February 2026
- Sarah Breeden speech “Talking ’bout next generation” elaborates on digital money and the proposed stablecoin regime
Compliance Impact
The regime is high‑impact and prudentially stringent, and non‑compliance could result in refusal of systemic recognition, restrictions on issuance, enforcement actions under the Banking Act 2009, and forced wind‑down or restructuring of stablecoin businesses. Given the 2027 go‑live and the depth of prudential, safeguarding, and operational changes required, firms intending to issue or support systemic sterling stablecoins face a multi‑year transformation programme with material supervisory scrutiny.
The Prudential Regulation Authority (PRA) has today published a consultation on the internal model approach to market risk (IMA), which represents the final piece of Basel 3.1’s implementation in the UK.
AI Analysis
The PRA has launched a consultation on targeted adjustments to the **Basel 3.1 internal model approach (IMA) for market risk**, confirming that IMA will still go live in the UK on 01 January 2028 while refining key aspects of profit-and-loss attribution (PLA), modellability, mixed IMA/standardised use, and operational requirements. These changes matter for compliance teams because they alter how trading book risks can qualify for IMA capital treatment, affect the transition path from standardised to IMA, and require updates to model governance, documentation, and implementation plans ahead of the Basel 3.1 go‑live dates in 2027 and 2028.
What Changed
- The PRA confirms that the Basel 3.1 internal model approach for market risk (FRTB‑IMA) will be implemented in the UK on 01 January 2028, with no further delay to the already-announced date.
The PRA proposes to extend the monitoring period for the profit and loss attribution (PLA) test from one year to three years before PLA outcomes are used to drive capital consequences for IMA trading...
The PRA proposes a more targeted approach for positions with limited trading data, adjusting the identification of risks that cannot be modelled under IMA so that more positions can be treated as...
The PRA proposes to modify the treatment of positions subject to a mix of IMA and standardised approaches, to avoid scenarios where capital requirements increase mechanically as firms gradually...
The PRA proposes operational simplifications and amendments to the IMA rules to improve proportionality, including simplifications in how firms evidence modellability, run tests, and manage the...
Suggested Considerations
Review the PRA consultation on the Basel 3.1 market risk internal model approach in detail and map each proposed change (PLA monitoring, modellability, mixed‑use treatment, operational simplifications) to current and planned IMA designs and policies.
Update the Basel 3.1 implementation roadmap for market risk to reflect that all non‑IMA Basel 3.1 rules start in January 2027, while IMA goes live on 01 January 2028, ensuring dependencies between standardised and IMA implementations are clearly sequenced.
Reassess the design, calibration, and governance of the profit and loss attribution framework to accommodate a three‑year monitoring period, including data retention, desk‑level analytics, exception management, and documentation of PRA engagement during the monitoring phase.
Perform an inventory of trading book risk factors and positions with limited trading data and assess how the PRA’s more targeted approach to non‑modellable risks will change modellability classifications, capital impacts, and desk‑level model scope.
Analyse current and planned use of mixed IMA and standardised approaches across desks to ensure that migration pathways do not inadvertently increase capital requirements and adjust transition plans, capital forecasts, and management information accordingly.
Key Dates
January 2027
- All Basel 3.1 rules other than the internal model approach for market risk come into force in the UK, including the new market risk standardised approaches and trading book boundary rules
01 January 2028
- The PRA’s adjusted internal model approach for market risk (FRTB‑IMA), as refined through this consultation, comes into effect; IMA capital requirements and associated reporting and testing obligations apply from this date
Compliance Impact
Failure to adapt Basel 3.1 IMA implementation plans to the PRA’s adjusted framework could result in higher than necessary capital requirements, delayed or refused IMA permissions, and potential supervisory findings on model risk management and governance. For firms with significant trading books, misalignment with the new IMA rules will have material prudential, profitability, and strategic implications.
The PRA has issued CP9/26, a consultation on targeted adjustments to the **Basel 3.1 market risk Internal Model Approach (IMA)** that was finalized in PS1/26. The main compliance significance is that it refines how firms can use market risk models, including capital caps, collective investment undertaking treatment, reporting/disclosure, and other operational clarifications, while preserving the PRA’s objective of robust model standards and closer international consistency.
What Changed
- The PRA is consulting on a targeted set of adjustments to the market risk IMA rules and related policy materials that were finalized in PS1/26.
The proposals include replacing the existing partial caps on IMA capital with a permission-based cap on IMA capital at the full ASA level.
The PRA proposes to adjust the treatment of collective investment undertakings (CIUs) by introducing a 90% de minimis look-through threshold for IMA inclusion.
The PRA proposes to extend the ASA treatment of index-tracking funds to IMA.
The PRA proposes to update reporting and disclosure obligations so they align with the revised IMA framework.
Suggested Considerations
Review the proposed IMA amendments in CP9/26 against current Basel 3.1 implementation plans and identify where trading desk, model, and capital calculations would change.
Assess whether any current or planned IMA portfolios would be affected by the proposed permission-based cap at the full ASA level.
Recalculate the implications of the proposed 90% CIU de minimis look-through threshold for portfolio classification and capital treatment.
Check whether index-tracking fund positions should be re-mapped under the proposed extension of ASA treatment to IMA.
Update reporting and disclosure implementation workstreams to reflect the PRA’s proposed alignment changes.
Key Dates
20 January 2026
- PS1/26 finalized the PRA’s market risk IMA rules that this consultation seeks to adjust
19 June 2026
- CP9/26 is in force as an open consultation for industry response
18 September 2026DEADLINE
- Consultation responses are due to the PRA
Compliance Impact
The compliance impact is material but targeted: firms using, or planning to use, the IMA must update model governance, capital methodology, and reporting/disclosure processes to match the revised framework. Failure to adapt could lead to miscalculated market risk capital, supervisory challenge, delayed approvals, or remediation expectations if a firm relies on outdated IMA assumptions.
Buying a home is different now to even a decade ago.People are living longer, the way they work has changed and, for many, how much they earn can vary month-to-month. People will also carry mortgage debt for longer and use it more flexibly across their lives.That’s why we’re proposing changes to help more people to access a mortgage – including first-time buyers, older borrowers and the self-employed.More flexibility for how people live nowWe want to give mortgage lenders the flexibility to t...
We set out next steps on issuing new rules and guidance on Money Market Funds (MMFs), following Government plans to replace the current rules. On 15 May, the Government set out its expectation that it will lay legislation that will replace the UK Money Market Funds Regulation. Read the Government statement.Money Market Funds (MMFs) play an important role in the financial system. MMFs are widely used for cash management and provide an alternative or complement to bank deposits for a broad rang...
AI Analysis
The FCA has confirmed its *updated approach* to UK money market fund (MMF) reforms, signalling that most detailed MMF requirements will move from retained EU law into FCA rules and guidance, with a new overarching “adequate resilience” liquidity rule and revised expectations for weekly liquid assets (WLA). The key compliance implication is a shift from hard, uniform liquidity minima to a combination of existing regulatory minima plus *supervisory expectations* of 40% WLA for stable NAV MMFs and 20% WLA for variable NAV MMFs, alongside confirmation that “delinking” and enhanced KYC measures will proceed.
What Changed
- The FCA will introduce a new overarching rule requiring that all UK‑domiciled MMFs must hold sufficient liquidity for “adequate resilience”, explicitly linking fund liquidity to financial stability...
The FCA will retain the current minimum WLA requirements from the existing UK Money Market Fund Regulation (UK MMFR) in its rules, instead of the previously consulted increases to 50% WLA for all...
The FCA will issue guidance setting out strong supervisory expectations that stable NAV MMFs should hold 40% WLA and variable NAV MMFs should hold 20% WLA to meet the new resilience requirement,...
The FCA makes clear that falling below the 40%/20% WLA supervisory expectations should only occur to meet redemption requests or due to factors beyond the manager’s control, and should be rare, with...
The FCA will retain existing minimum daily liquid asset (DLA) requirements from UK MMFR in rules and does not plan to issue new guidance on DLA levels, but expects DLA and WLA together to be...
Suggested Considerations
Conduct a comprehensive gap analysis comparing current MMF liquidity management frameworks (DLA, WLA, and stress‑testing assumptions) against the forthcoming FCA “adequate resilience” rule and the 40% (stable NAV) / 20% (variable NAV) WLA supervisory expectations.
Update MMF liquidity policies, board‑approved risk appetites, and internal limits to reflect the new WLA expectations, including documentation of when and how funds may temporarily operate below 40%/20% WLA and the governance required to approve such deviations.
Implement enhancements to liquidity monitoring and MI reporting so that portfolio managers, risk, and compliance have near‑real‑time visibility of DLA and WLA levels, breaches of internal and supervisory thresholds, and redemption‑driven use of liquidity buffers.
Review and update fund prospectuses, KIIDs/KIDs, and investor disclosures to ensure that descriptions of MMF liquidity management, the availability of liquidity management tools, and the operation of stable NAV structures are accurate under the new FCA regime.
Revise and strengthen investor KYC procedures for MMFs to capture concentration risks and potential correlated outflows, including segmentation of investor types, monitoring of large holders, and scenario analysis around key client redemption behaviour.
Key Dates
06 December 2023
– FCA publishes CP23/28 “Updating the regime for Money Market Funds,” consulting on higher liquidity minima (15% DLA and 50% WLA), delinking, enhanced KYC, and broader resilience measures
14 May 2026
– HM Treasury and the FCA publish the joint policy statement “Reforms to Money Market Fund Regulations,” confirming the Government’s intention to replace the UK MMFR with a new framework and that most MMF requirements will be set in FCA rules and guidance, including higher liquidity expectations
15 May 2026
– FCA issues its statement “FCA update on reforms to the UK Money Market Fund Regulation,” setting out updated proposals, including retention of current minimum WLA in rules, the new “adequate resilience” liquidity rule, and supervisory expectations of 40% WLA for stable NAV and 20% WLA for variable NAV MMFs, and indicating that CP23/28 measures such as delinking and enhanced KYC will largely be taken forward
Q4 2026
– The UK’s new MMF regime is expected to be in place, subject to Parliamentary approval of the enabling legislation, after which the detailed FCA rules and guidance (including the new resilience rule and WLA expectations) will apply
TBD (as soon as Parliamentary time allows)
– HM Treasury will lay the statutory instrument replacing the UK MMFR with the new legislative framework under which FCA rules and guidance for MMFs will be made
Compliance Impact
Non‑compliance with the new FCA MMF rules and supervisory expectations is likely to be treated as a significant prudential and conduct issue, exposing firms to supervisory intervention, potential restrictions on MMF operations, and enforcement action where governance or disclosure failures are identified. Given the explicit financial stability focus of these reforms, regulators can be expected to scrutinise outlier funds and firms that do not align internal practice with the 40%/20% WLA expectations or that cannot evidence robust liquidity and KYC frameworks.
The PRA Regulatory Digest is for people working in the UK financial services industry and highlights key regulatory news and publications delivered for the month.
PS15/26 sets out the PRA’s final Phase 1 reforms to **Pillar 2A capital methodologies and reporting**, aligned with the UK’s Basel 3.1 implementation and intended to modernise how risks beyond Pillar 1 are captured. It introduces revised approaches and expectations across credit, operational, pension obligation, market and counterparty credit risk, plus substantial updates to ICAAP/SREP guidance and Pillar 2 reporting for both mainstream firms and SDDTs.
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
22 May 2025
– PRA published CP12/25 launching Phase 1 of the Pillar 2A review and consulting on revised methodologies and reporting
05 September 2025
– Consultation period for CP12/25 closed, with industry feedback informing PS15/26
02 March 2026
– Changes relating to pension obligation risk and market/counterparty credit risk methodologies and associated reporting expectations take effect
01 January 2027
– Basel 3.1 standards are implemented in the UK and the retirement of the refined Pillar 2A methodology takes effect; Phase 1 Pillar 2A changes for credit and operational risk are aligned to this Basel 3.1 implementation date
2027 (TBD)
– PRA plans to publish a further consultation paper (Phase 2) on an in‑depth review of individual Pillar 2A methodologies
Compliance Impact
The impact is high: the reforms change how Pillar 2A capital is calculated, justified and reported, with direct consequences for total capital requirements, ICAAP content and supervisory dialogue. Failure to implement the new methodologies and reporting expectations on time can lead to higher capital add‑ons, adverse SREP outcomes, supervisory remediation programmes and potential restrictions on distributions or business growth.
PRA Policy Statement PS14/26 finalises the restatement of CRR definitions into the PRA Rulebook Glossary, with consequential amendments across other Rulebook Parts and updates to SS15/13 on groups. For compliance teams, the key issue is transition planning: the remaining CRR definitions are being moved out of the CRR framework, and firms must ensure their policies, capital documentation, systems, and references align with the PRA Rulebook versions before the repeal of CRR Articles 4–5 takes effect on 1 January 2027.
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
July 2025
- HM Treasury published its Policy Update on applying the FSMA model of regulation to the UK CRR and proposed revoking the remaining CRR provisions while restating only necessary definitions
July 2025
- PRA published CP19/25 proposing the transfer of CRR definitions into the PRA Rulebook Glossary and consequential amendments across the Rulebook
January 2026
- PRA published earlier final policy work on CRR restatement and related implementation measures, indicating the wider restatement programme was already underway
February 2026
- HM Treasury published a policy update confirming it would proceed largely as consulted on, with a change to the statutory definition of “securitisation” for consistency with PRA Basel 3.1 rules
February 2026
- The commencement statutory instrument revoking CRR Articles 4–5 was made, with effect from 1 January 2027
Compliance Impact
The compliance impact is moderate to high because this is a definitional restatement rather than a wholesale policy rewrite, but it affects the legal basis of many prudential references and could create misstatement risk if firms continue to rely on revoked CRR text after 1 January 2027. Non-compliance may lead to inaccurate capital, governance, or perimeter analysis, and could trigger supervisory findings where firms have not updated systems, documentation, or controls to the new Rulebook structure.
The PRA’s Policy Statement PS13/26 finalises the CP20/25 proposals on UK branches of third‑country (re)insurers, including raising the subsidiarisation threshold, embedding existing reporting and investment waivers into the Rulebook, and updating supervisory expectations on ORSA and resolution. Compliance teams at third‑country branches must now recalibrate threshold monitoring, overhaul reporting processes, and update governance and documentation to align with the revised Third Country Branches and Reporting Parts of the PRA Rulebook, updated SSs, and new Statements of Policy.
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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
16 September 2025
– PRA publishes CP20/25, proposing changes to third‑country branch policy, including the higher subsidiarisation threshold and new reporting thresholds
16 December 2025
– Consultation period for CP20/25 closes; representations received from affected firms and stakeholders
Q1–Q2 2026
– PRA indicates that the increase in subsidiarisation threshold from £500 million to £600 million would take effect on publication of the relevant policy statement (PS13/26), with immediate relevance for threshold monitoring and branch vs subsidiary planning
31 December 2026
– Rulebook and policy changes (including amendments to the Third Country Branches and Reporting Parts, reinstatement of annual templates IR.19.01.01 and IR.20.01.01, embedded reporting thresholds, embedded pure reinsurance relief, updates to SS44/15, SS41/15, SS19/16, SoP6/24, SoP7/24, and SoP1/19, and disapplication/restatement of EIOPA Branch Guidelines) are scheduled to come into force
Compliance Impact
The impact is material for all UK branches of third‑country (re)insurers, particularly those near the new subsidiarisation and reporting thresholds, with consequences including potential forced subsidiarisation, expanded reporting burdens, or supervisory challenge if expectations on forecasting, ORSA, or resolution planning are not met. Non‑compliance could trigger PRA supervisory interventions, restrictions on business, and increased scrutiny during authorisation and ongoing supervision.
UK financial firms can adopt tokenisation and distributed ledger technology (DLT) with greater confidence, as the Financial Conduct Authority (FCA) and the Bank of England set out a shared vision and seek industry views on the future of UK wholesale markets. Tokenisation is the process of creating a digital representation of a real-world asset – such as a share, bond or unit of currency – on a digital ledger. It has the potential to streamline wholesale markets, making everything from issuing...
The FCA has banned Frank Breuer from working in UK financial services and fined him £755,000 for repeatedly acting without integrity and putting customers at risk for personal financial gain. Mr Breuer was the joint owner and sole director of Bluesky Wealth Management Limited (Bluesky), which provided advice on investments and pensions. Although authorised to advise on defined benefit (DB) pension transfers, the firm did not have the appropriate professional insurance in place from April 2019...
Speech by Nikhil Rathi, FCA chief executive, at the Association of Foreign Banks (AFB) luncheon. When I saw that a boxing ring had been temporarily installed in this room last autumn, I wasn’t quite sure whether it was a warning to us regulators…Or some kind of art installation commenting on the past few years in financial markets.At some points it has felt bruising, to say the least.Some pressures have been sharp and immediate – geopolitical shocks, sudden market events.Others slower but no ...
Funded reinsurance transactions involving UK life insurers will face enhanced regulatory requirements under new proposals unveiled today by the Prudential Regulation Authority (PRA).
The FCA is seeking views on proposals to change rules that govern the publication of research during the initial public offering (IPO) process. The FCA is consulting on removing the requirement for a 7-day delay before connected research on an IPO can be published. It also consults on removing rules that require firms to provide independent analysts with the same information as their own research analysts.These rules were introduced in 2018 to encourage the production of unconnected research,...
The FCA has led international action to stop illegal finfluencers putting consumers' money at risk. Seventeen regulators worldwide took part in the 'week of action' which included enforcement activity, consumer awareness campaigns, and educational programmes for finfluencers who want to act responsibly. Activity started on 20 April 2026.In the UK, the FCA:Secured a guilty plea from Geordie Shore’s Aaron Chalmers for illegal promotions on social media. Criminal proceedings have been commenced ...
Firms willbenefitfromreduced costs andgreater flexibility, andfind it easier tocomply with the Senior Managers and Certification Regime (SM&CR),following reformsset outon 22 April by theFCA and Prudential Regulation Authority (PRA). The changes, which come as the first phase of a multi-stage package of reform from the Government and regulators, will maintain the core principle of senior leader accountability, and will benefit firms by:Giving more time to submit senior manager applications whe...
On 20 March 2026, the Bank of England hosted an event to gather evidence from a broad range of stakeholders as part of the Financial Policy Committee’s (FPC’s) assessment of bank capital requirements in the UK.
The SONIA Stakeholder Advisory Group supports the Bank’s administration of SONIA by providing advice and technical input to the Bank and the SONIA Oversight Committee
The 2026/27 Business Plan sets out the workplan for each of our strategic priorities and our strategy to advance our primary and secondary objectives. This year’s business plan confirms the PRA’s continued focus on safety and soundness and policyholder protection, alongside a proportionate and efficient approach to regulation.
The FCA has set out plans to take action against Hartley Pensions Limited and an individual involved at the firm. Hartley was a Self-Invested Personal Pension operator, which went into administration in July 2022. The FCA alleges that Hartley provided it with false and misleading information and improperly withdrew and invested substantial amounts of customers’ pension funds, without their consent, to benefit an individual at the firm.The FCA alleges that the individual dishonestly used the p...
The Bank of England has today published new and updated guidance on how the Bank might implement the UK’s resolution regime in the event of a bank failure.
AI Analysis
The Bank of England (BoE) has published updated operational guides on implementing the UK's resolution regime for failing banks, including new details on transfer resolutions and an alternate bail-in approach using non-transferable contingent beneficial interests, informed by recent failures like Silicon Valley Bank and Credit Suisse. This matters for compliance professionals as it enhances transparency on BoE execution strategies, strengthens cross-border resolvability (e.g., via a US SEC No-Action Letter), and requires firms to align recovery/resolution plans with these operational clarifications to ensure feasibility and credibility under the Resolvability Assessment Framework (RAF).[BoE News Release](https://www.bankofengland.co.uk/news/2026/april/boe-enhances-resolution-readiness-with-updated-operational-guides)
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
OngoingDEADLINE
- Firms must maintain resolution packs and MREL compliance; bail-in firms have at least **6 years** (plus up to 2-year extension) to meet end-state MREL, and **minimum 18 months** for additional resolvability requirements
Advance notificationDEADLINE
- Modified insolvency firms forecasting £25bn assets or transactional account thresholds within 3 years must inform BoE/PRA
Compliance Impact
Urgency: High - This is guidance, not new rules, but directly impacts resolution plan credibility and RAF assessments, with potential supervisory/enforcement actions for non-alignment (e.g., MREL shortfalls or unresolved barriers). Firms must act proactively to avoid heightened BoE scrutiny, especially post-SVB/Credit Suisse lessons emphasizing bail-in effectiveness and no public fund reliance.
The Money Markets Committee is a forum for market participants and authorities to discuss the UK unsecured deposits and funding market and securities lending and repo markets.
We are changing the publication dates of the Decision Maker Panel and Agents’ summary of business conditions so that they no longer fall on the same day as publication of the Monetary Policy Report
Our Financial Policy Committee (FPC) meets to identify risks to financial stability and agree policy actions aimed at safeguarding the resilience of the UK financial system.
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
9 July 2025DEADLINE
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)
11 July 2025
£150M threshold increase effective
TBD 2026DEADLINE
PRA consultation on permanent LTI flow limit changes (due course post-review)
30 June 2026
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).
The PRA Regulatory Digest is for people working in the UK financial services industry and highlights key regulatory news and publications delivered for the month.
The PRA has finalized the Financial Services Compensation Scheme (FSCS) Management Expenses Levy Limit (MELL) for 2026/27 at £113 million, effective April 1, 2026. This policy statement confirms the proposed budget following consultation, establishing the maximum amount that FSCS-levy-paying firms must fund for the compensation scheme's operating costs, with implications for all PRA and FCA-authorized firms across banking, insurance, and investment sectors.
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
13 January 2026
- Consultation Paper CP1/26 published
10 February 2026DEADLINE
- Consultation deadline
31 March 2026
- Policy Statement PS8/26 issued
1 April 2026
- MELL 2026/27 effective date; FSCS financial year begins
Shojin Financial Services Limited (Shojin) is a crowdfunding platform authorised and regulated by the FCA. Shojin allowed customers to make investments that were used to fund loans toward property developments. On 23 March 2026, Shojin went into administration. Simon Carvill-Biggs and Ian Corfield of FRP Trading Advisory Limited were appointed as Joint Administrators.The Joint Administrators are responsible for acting in the best interests of the people who are owed money by Shojin, and they ...
The Bank is today announcing a simplification and reduction in the Discount Window Facility (DWF) pricing, as part of its previously announced review of the DWF.
On 25 March 2026, following a petition filed by the FCA, the High Court ordered that Equity for Growth (Securities) Limited (EFG) be wound up. EFG is a corporate finance firm. EFG was also a principal for a number of appointed representatives between 2015 and 2020, including Amyma Ltd and Osborne Baldwin Ltd, which traded as Hunter Jones.An appointed representative carries on regulated activity under the responsibility of an authorised firm, known as 'the principal'. Find more information on ...
The Bank of England and Prudential Regulation Authority have finalised a package of changes to firms’ resolution reporting and disclosure requirements which reduces the burden of regulation while maintaining a robust and credible regime that supports growth and competition.
**SS9/17 - Recovery Planning** is the PRA's supervisory statement establishing expectations for how UK banks, building societies, and designated investment firms must prepare and maintain recovery plans to ensure financial stability during periods of stress. This guidance supersedes the previous SS18/13 and represents a substantial tightening of recovery planning requirements, making credible, testable, and executable recovery plans a core component of prudential regulation rather than a compliance checkbox.
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
Second half of 2017
- Proposed implementation date for superseding SS18/13 (achieved with December 2017 publication)
21 September 2017DEADLINE
- PRA consultation deadline for CP9/17 (the consultation paper preceding this statement)
11 December 2017
- SS9/17 first published and became effective
OngoingDEADLINE
- Firms must maintain and test recovery plans continuously; the PRA notes this statement "may be revised as recovery planning becomes further embedded in firms' risk management practices"
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...
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
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.
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...
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
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.
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...
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
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 2026DEADLINE
- PS10/26 effective (related: Resolution Assessment threshold amendments, reports due 2 October 2026)
1 January 2027DEADLINE
- Revised MRL001 and MRL003 templates effective; first submissions of 2026 Q4 data (ending 31 December 2026) due in **February 2027**
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.
The Prudential Regulation Authority (PRA) has fined The Bank of London Group Limited and Oplyse Holdings Limited (formerly The Bank of London Group Holdings Limited) £2 million for misleading the PRA over their capital positions, failing to act with integrity, failing to be open and cooperative with the regulator and failing to maintain adequate financial resources.
AI Analysis
The Prudential Regulation Authority (PRA) fined The Bank of London Group Limited and its parent Oplyse Holdings Limited £2 million (reduced from £12 million due to financial hardship) for serious breaches including misleading the regulator with fabricated documents on capital positions, failing to act with integrity, lacking openness, and breaching capital and large exposure rules from October 2021 to May 2024. This marks the PRA's first enforcement for integrity failures and first action against a parent holding company, signaling heightened scrutiny on governance, reporting accuracy, and parent-subsidiary accountability in UK banking. Compliance professionals should note this as a precedent reinforcing zero tolerance for deceptive practices, with potential for escalated penalties absent settlement or hardship claims.
What Changed
This enforcement action does not introduce new rules but enforces existing PRA requirements with landmark application:
First PRA fine for breaching Fundamental Rule 1 (conduct business with integrity), highlighting fabrication of documents as a core violation.
First enforcement against a parent financial holding company (Oplyse Holdings), extending liability to group entities for capital reporting and related party exposures.
Emphasizes strict adherence to Fundamental Rules 3, 4, and 7 (prudence, adequate resources, openness), CRR reporting (e.g., own funds on individual/consolidated basis), Large Exposures rules...
Suggested Considerations
Conduct capital position audits to verify CRR reporting accuracy (individual and consolidated own funds) and remediate any discrepancies.
Review intra-group exposures for large exposure limits (Articles 393-395), related party transactions (Rules 2.1/2.3), and notification obligations.
Enhance governance controls for integrity (Fundamental Rule 1), including document fabrication prevention, timely solvency disclosures (Fundamental Rule 7), and prudent management (Fundamental Rule 3).
Stress-test parent-subsidiary interactions and ensure openness with PRA on deteriorating positions.
Update training on PRA enforcement policies (PS1/24) and bank supervision (SS3/21).
Key Dates
7 October 2021DEADLINE
22 May 2024; Period of identified breaches, including capital non-compliance, misleading submissions, and large exposure failures
Compliance Impact
Urgency: High – This sets a precedent for integrity-based fines and parent company liability, risking similar actions for any firm with capital misreporting or opaque group dealings; even settled penalties were reduced only due to hardship, indicating PRA's willingness to pursue £12m+ originally. Matters critically for banks/fintechs with complex structures, as it amplifies personal accountability under Senior Managers Regime and erodes trust, potentially triggering closer PRA supervision or prohibitions.
The Prudential Regulation Authority has today published proposals aimed at ensuring banks can monetise liquid assets quickly in a fast-paced stress event – such as the collapse of Silicon Valley Bank in 2023.
AI Analysis
The PRA has launched a three-month consultation on modernized liquidity standards designed to ensure banks can rapidly convert liquid assets to cash during stress events, responding directly to lessons from the 2023 collapses of Silicon Valley Bank and Credit Suisse. Rather than requiring banks to hold more liquid assets, the reforms focus on **operationalizing existing liquidity** through enhanced stress testing, removal of exemptions for sovereign bonds, and improved preparedness for central bank facility access.
What Changed
The consultation proposes four primary regulatory modifications:
Weekly stress testing requirement: Firms must conduct internal stress tests evaluating rapid outflows within one week, supplementing the existing monthly reporting framework
Removal of Level 1 asset exemption: Sovereign bonds and other "level 1 assets" will no longer be exempt from annual testing of monetization capability for non-liquid assets, closing a significant...
Barrier identification mandate: Firms must systematically evaluate their liquidity, identify barriers to asset monetization, and document findings
Central bank facility preparedness: Regulatory encouragement (not mandate) for operational readiness to access Bank of England facilities during stress
Critically, the PRA explicitly states these...
Suggested Considerations
*Immediate (by April 27, 2026):
Review the full consultation document and impact assessment
Identify internal stakeholders (Treasury, Risk, Operations, Compliance) for response coordination
Assess current liquidity stress testing capabilities against proposed weekly timeframe requirement
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.
What Changed
- Composition of liquidity resources: Revise the Overall Liquidity Adequacy Rule (OLAR) to explicitly require adequate composition (not just amount) of liquidity resources, balancing cash, non-cash...
Monetisation risk assessment: Replace 'marketable asset risk' with monetisation risk in ILAA rule 11.5, with detailed expectations in updated SS24/15 on market access, accounting treatment, repo/sale...
Stress scenario design: New requirement for a business model-specific stress scenario with sudden, severe outflows peaking in the first week (up to 7 days), integrated into ILAAP/ILAA.
Governance and ILAAP updates: Embed governance for ILAAP preparation, OLAR reviews, ALM committees; clarify risk appetite, Liquidity Contingency Plans (LCP), funding plans; streamline SS24/15...
Central bank facilities: Expectations to assess pre-positioned collateral, drawing capacity, operational readiness for publicly available facilities (excluding emergency assistance); monitor in ILAAP.
Suggested Considerations
Review and respond to consultation by 17 June 2026, indicating confidentiality and publication consent.
Update internal processes: Revise ILAAP/ILAA to include new stress scenario (sudden/severe outflows in first 7 days), monetisation risk assessments (with template), liquidity composition analysis, central bank facility readiness (pre-positioned collateral monitoring).
Stress testing: Design firm-specific acute stress with daily granularity, lowest cumulative net cashflows analysis over LCR/survival horizons.
Systems check: Assess impact on validation processes from PRA110 changes; ensure operational readiness for asset monetisation.
Key Dates
17 June 2026DEADLINE
Consultation responses due; (submit to CP5_26@bankofengland.co.uk or Liquidity Policy Team)
Compliance Impact
Urgency: High – Firms must engage now as the 17 June 2026 response deadline is ~3 months away (today: 17 March 2026), and changes target evolving digital risks that could amplify outflows. Non-engagement risks supervisory scrutiny on ILAAP adequacy, OLAR compliance, and resilience in stresses; proportionate but requires ILAAP revisions pre-final rules.
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...
The Prudential Regulation Authority (PRA) has imposed a financial penalty of £10,625,000 on U K Insurance Limited (UKI Limited) in connection with a miscalculation of their Solvency II balance sheet during 2023 and 2024.
AI Analysis
The PRA fined U K Insurance Limited (UKI Limited) £10.625 million (reduced from £21.25 million via 50% Early Account Scheme discount) for breaching Solvency II reporting rules due to a miscalculation overstating its solvency balance sheet in 2023-2024, stemming from ineffective controls and resourcing in finance/actuarial functions. This landmark case highlights PRA's emphasis on accurate prudential reporting and rewards early self-reporting/cooperation, signaling heightened enforcement scrutiny on insurers' control frameworks. It matters as it demonstrates PRA's use of the EAS for efficiency and underscores risks of control failures undermining supervisory effectiveness.
What Changed
No new regulatory rules or requirements are introduced; this is an enforcement action applying existing PRA rules. Key breaches include:
PRA Fundamental Rule 6: Failure to organise/control affairs responsibly/effectively due to ineffective preventative/detective controls and resourcing issues.
Notifications Rule 6.1: Information to PRA not factually accurate or complete.
Reporting Rules 2.4 and 3.2: Submissions lacked completeness, reliability, and compliance with SFCR structure/principles.
This is the first EAS application, per PRA's enforcement approach (pages...
Suggested Considerations
Conduct control reviews: Assess finance/actuarial functions for preventative/detective control gaps, resourcing adequacy, and documentation (e.g., double-counting risks in Solvency II balance sheets).
Test reporting accuracy: Validate Solvency II submissions (e.g., SFCR, SCR Coverage Ratio) against Rules 6.1, 2.4, 3.2; ensure factual accuracy, completeness, and reliability.
Leverage EAS: Self-report errors early, provide candid root-cause analyses, and make admissions to qualify for penalty discounts.
Remediate proactively: Invest in control enhancements, as UKI did post-identification; align with PRA 2026 priorities on data quality, internal models, and operational resilience.
Document governance: Address longstanding resourcing concerns, per PRA's 2023 PSM letter risks.
Key Dates
2023
2024; Relevant period of miscalculation and breaches
13 August 2024
Firm notified PRA of error with preliminary root cause analysis
23 August 2024
Public disclosure via Regulatory News Service on SCR Coverage Ratio impact
1 July 2025
Aviva acquired DLG/UKI Limited (events pre-date)
10 March 2026
PRA issued Final Notice and imposed penalty
Compliance Impact
Urgency: High – This enforcement validates PRA's zero-tolerance for solvency misreporting, risking supervisory misjudgment and policyholder threats; firms face similar fines without EAS discounts. It amplifies 2026 priorities on internal models, data quality, and controls amid softening markets/BPA pressures, demanding immediate control audits to avoid escalation.
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.
What Changed
- New Recognised Exchanges (CRR) Part in the PRA Rulebook: Specifies conditions for REs focusing on (i) exchange/market structure risk (e.g., operational robustness of clearing/settlement) and (ii)...
Restatement of main indices: List from Commission Implementing Regulation 2016/1646 moved to PRA Glossary without policy changes.
Amendment to 'higher risk equity exposure' definition: Aligns with Basel 3.1 near-final rules, excluding qualifying listed equities from higher risk weights under the standardized approach (ties to...
Revocation of SS20/13: Deletes the supervisory statement on third-country equivalence and REs; consequential amendments to Counterparty Credit Risk (CRR), Credit Risk Mitigation (CRR), and SDDT –...
Minor clarifications: Edits to scope and assessment of clearing/settlement mechanisms for overseas exchanges.
Suggested Considerations
Assess exchanges/assets: From 1 July 2026, evaluate overseas exchanges against new conditions (market structure, liquidity); document processes and update periodically; align with internal credit risk models.
Update policies/systems: Revise credit risk, counterparty credit risk, and CRM frameworks to incorporate firm-led RE assessments; remove references to revoked SS20/13.
Review exposures: Reassess equity exposures for Basel 3.1 alignment; test industry-shared assessments for accuracy and own-accountability.
Governance: Embed in risk management; prepare for PRA thematic reviews on implementation.
Reporting: No new forms, but ensure CRR disclosures reflect updated RE treatments.
Key Dates
18 June 2025DEADLINE
- Consultation deadline for CP3/25 (closed; feedback incorporated in PS6/26)
1 July 2026
- Implementation date for new RE rules, main indices restatement, SS20/13 revocation, and related Rulebook amendments
1 January 2027
- Proposed implementation for Basel 3.1 changes, including higher risk equity exposure amendments (alongside broader standards)
Compliance Impact
Urgency: High – Effective 1 July 2026 (approx. 4 months from now), requiring immediate gap analysis, policy updates, and assessor training to avoid capital miscalculations or supervisory findings. Impacts prudential calculations directly, with flexibility reducing PRA burden but increasing firm accountability and review risks.
The latest report from the Office for Professional Body Anti-Money Laundering Supervision (OPBAS) finds there is still room for improvement. The anti-money laundering supervisors of professional services firms are more effective than at any time since 2018. However, OPBAS remains concerned that their enforcement lacks the teeth to deter firms from falling short of minimum standards.OPBAS’s latest report found Professional Body Supervisors (PBSs) generally continue to demonstrate good levels o...
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.
Katharine Braddick CB appointed as the next Deputy Governor for Prudential Regulation at the Bank of England and Chief Executive of the Prudential Regulation Authority, succeeding Sam Woods when his term ends in June 2026.
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.
The Bank's Court of Directors acts as a unitary board, setting the organisation's strategy and budget and taking key decisions on resourcing and appointments. Required to meet a minimum seven times per year, it has five executive members from the Bank and up to nine non-executive members.
The Bank's Court of Directors acts as a unitary board, setting the organisation's strategy and budget and taking key decisions on resourcing and appointments. Required to meet a minimum seven times per year, it has five executive members from the Bank and up to nine non-executive members.
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 permissions for balance sheet liabilities.
Updates to guidelines on capital instrument redemption, including early calls for unforeseen regulatory/tax changes and treatment of tender offers.
Suggested Considerations
Review and respond to consultation by 24 April 2026 via email to CP4_26@bankofengland.co.uk or post, indicating confidentiality and publication consent preferences.
Assess current own funds instruments against proposed clarifications (e.g., redemption permissions, MCR eligibility, maturity requirements) and update internal classifications or applications if needed.
Evaluate reconciliation reserve calculations for potential adjustments post-permission grants.
Engage PRA on concurrent transactions (e.g., redemptions) for streamlined processes under clarified expectations.
Prepare for Rulebook updates by mapping impacts to Own Funds, Reporting, Group Supervision, Glossary, and SCR Standard Formula parts.
Key Dates
24 April 2026DEADLINE
- Consultation response 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.
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
24 October 2025DEADLINE
- Consultation response deadline for CP13/25
20 February 2026
- Publication date of PS5/26 (final policy)
~20 August 2026DEADLINE
- 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.
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...
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 Rulebook for consistency; not relevant to credit unions or third-country branches.
Suggested Considerations
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 2026DEADLINE
- Consultation response deadline; submit to CP3_26@bankofengland.co.uk or PRA at 20 Moorgate, London EC2R 6DA
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.
The Upper Tribunal has upheld the FCA's decisions to ban Stephen Joseph Burdett and James Paul Goodchild from working in financial services. Mr Burdett and Mr Goodchild previously held senior roles at Synergy Wealth Limited (Synergy) and Westbury Private Clients LLP (Westbury), respectively.The FCA banned the pair from working in regulated financial services for recklessly exposing pension holders to unsuitable investments.The Tribunal also found that it was appropriate for the FCA to impose ...
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,...
Risk retention: Introduce a new combined modality merging two existing ones.
Market disclosure (transparency): Streamline for all securitisations; amend underlying documentation, delete PRA templates (use revised FCA Handbook templates), disapply templates for investor...
Review and respond: Analyse proposals against current operations; submit feedback by 18 May 2026 to CP2_26@bankofengland.co.uk, indicating confidentiality and publication consent.
Gap analysis: Assess due diligence processes, risk retention setups, disclosure templates, reporting (e.g., COREP), and capital models for resecuritisations/MGS loans; update for proportionality.
Coordinate with FCA: Align on shared templates/transparency (per FCA CP26/6); prepare for repository shift.
Policy updates: Revise internal policies, training, and systems for new risk retention modality, reduced verifications, and readability improvements post-final PS.
Monitor legislation: Track HM Treasury SI and PRA policy statement for final rules.
Key Dates
1 January 2026
- Related CRR/Solvency II restatement (PS12/25) already effective, preserving core securitisation requirements
18 May 2026DEADLINE
- Consultation response 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
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.
The Bank of England held roundtable meetings with representatives from regulated firms on the responsible adoption of artificial intelligence and machine learning (AI and ML), to better understand the constraints that firms may be facing.
The Market Participants Group (MPG) is a senior-level forum for financial market participants to share their views on relevant themes and narratives in financial markets with members of the Bank of England’s Monetary Policy Committee.
Not for distribution, directly or indirectly, in or into the United States, Canada, Australia, Japan or any other jurisdiction where it is unlawful to distribute this announcement
Not for distribution, directly or indirectly, in or into the United States, Canada, Australia, Japan or any other jurisdiction where it is unlawful to distribute this announcement
This article provides an update regarding implementing changes for country grouping conventions used in statistics covering the international business of monetary financial institutions operating in the UK and the consolidated claims of UK headquartered monetary financial institutions.
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.
What Changed
DP1/26 proposes no immediate binding changes, as it is a discussion paper seeking views rather than a consultation with firm rules. Key elements include:
Incremental reforms: Extending recent template deletions (e.g., from Strong and Simple initiative for liquidity returns in small banks) to wider collections, aiming for cost reductions estimated at...
Guiding principles: Four principles to shape FBD: (i) anchor data in PRA objectives; (ii) collect data 'once and well' (minimize volume, maximize use); (iii) ease firm supply processes; (iv) ensure...
Trade-offs: Balancing data standardization, comparability, international alignment, granularity vs. aggregation, and regular vs. ad-hoc requests.
Future roadmap: PRA will develop reforms based on responses, focusing on clearer instructions, coherent UK-wide processes, and addressing gaps for emerging risks.
No finalized requirements yet;...
Suggested Considerations
Submit responses: By 5 May 2026 via email to DP1_26@bankofengland.co.uk or post to PRA address; indicate confidentiality preferences, noting no guaranteed protection under FOIA/data regimes.
Review and assess impact: Evaluate current reporting against proposed principles/trade-offs; identify cost-saving opportunities and gaps in data processes.
Engage proactively: Provide feedback on reforms (e.g., template reviews, standardization) to shape roadmap; benchmark data capabilities (e.g., vs. BCBS 239).
Prepare internally: Anticipate clearer instructions, potential UK-wide coherence (with FCA), and shifts in regular/ad-hoc balance; no immediate submissions changed.
Key Dates
5 May 2026DEADLINE
- Deadline for responses to DP1/26
Compliance Impact
Urgency: Medium – Not critical, as no immediate rules or deadlines beyond response submission (3+ months away from 5 Feb 2026). Matters for strategic planning: signals cost reductions but requires input to avoid unfavorable changes; aligns with PRA's 2026 priorities on data accuracy/quality (e.g., for risk reporting, stress testing). Firms with high reporting burdens should prioritize to influence simplifications and mitigate risks from evolving data needs (e.g., emerging risks, AI).
In October 2025, 25 financial institutions active in the UK foreign exchange (FX) market participated in the semi-annual turnover survey for the Foreign Exchange Joint Standing Committee (FXJSC).
The Upper Tribunal has upheld the FCA’s decision that Rangecourt SA (formerly Banque Havilland), Edmund Rowland, the former London CEO and Vladimir Bolelyy, a former Bank employee, acted without integrity. The Tribunal agreed with the FCA that significant fines should be imposed, deciding that fines of £4m, £352,000 and £14,200 were appropriate for Rangecourt SA, Mr Rowland and Mr Bolelyy respectively. The Tribunal also upheld the FCA’s decision to ban Mr Rowland and Mr Bolelyy from working i...
The Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) have announced the first cohort of banks and building societies to benefit from their joint Scale-up Unit. The Scale-up Unit announced last year is designed to build stronger ties and provide tailored support for fast-growing and innovative financial firms, helping them to grow sustainably at pace.The 6 firms that expressed interest and have been accepted to the first cohort are:Allica BankClearBankMonument BankNo...
The Prudential Regulation Authority and Financial Conduct Authority have announced the first cohort of banks and building societies to benefit from their joint Scale-up Unit.
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.
On 21 January 2026, Guavapay Limited entered compulsory liquidation. The Official Receiver, an officer of the Insolvency Service, is its liquidator. Guavapay is authorised by the FCA to issue E-money and provide payment services to its customers.On 17 September 2025, Guavapay agreed to a voluntary requirement with the FCA, restricting the activities it can undertake. See details on the Financial Services Register.As liquidator, The Official Receiver is responsible for:Managing customer claims...
CP25/15 proposes prudential rules and guidance for UK firms issuing **qualifying stablecoins** and safeguarding **qualifying cryptoassets**, aiming to foster a safe, competitive crypto sector while prioritizing consumer protection and market integrity. This matters for compliance professionals as it introduces tailored prudential sourcebooks (COREPRU and CRYPTOPRU) to mitigate firm failure risks, aligning with the FCA's crypto roadmap and Treasury's statutory plans.
What Changed
- Prudential Sourcebooks: Introduces COREPRU (core requirements across sectors) and CRYPTOPRU (crypto-specific calibrations) for "CRYPTOPRU firms" handling regulated crypto activities, covering own...
Own Funds and Capital Rules: Firms must hold financial resources adequate in amount and quality, including adjustments for valuation uncertainty, stress realizable values, and interim profits in CET1...
Risk Management and Outcomes: Targets prevention of firm failures, disorderly wind-downs, and consumer harm; measures success via reduced failure rates, market confidence, and prudential assessments.
Sector-Specific Rules: Calibrated for stablecoin issuance and cryptoasset safeguarding, with future consultations on broader applications (e.g., trading venues, staking).
Suggested Considerations
Respond to Consultation: Firms, advisers, and stakeholders must submit comments by 31/07/2025 using the online form, email, or post to influence final rules.
Assess Applicability: Crypto firms evaluate if they qualify as CRYPTOPRU firms; conduct gap analyses against proposed COREPRU/CRYPTOPRU rules on own funds, capital adequacy, and stress testing.
Prepare Prudential Frameworks: Develop internal capital adequacy processes reflecting stress events, valuation adjustments, and ongoing prudential assessments; review threshold conditions and business principles.
Engage on Related CPs: Monitor and respond to CP25/14 (stablecoin issuance/custody) and future CPs (e.g., CP2, Q3 2025 Conduct Standards).
Data and Reporting Readiness: Prepare to provide firm/market data for FCA evaluations on adherence and outcomes.
Key Dates
28/05/2025
- Consultation opens and CP first published
31/07/2025
- Consultation closes; submit feedback via online form, email ([email protected]), or post
Q3 2025
- Upcoming Conduct and Firm Standards CP affecting all cryptoasset firms, including QS issuers and custodians
Post
31/07/2025; - FCA considers feedback and publishes final rules (no specific date given)
Future (CP2 per Roadmap)
- Consultation on remaining prudential sourcebook requirements
Compliance Impact
Urgency: High – As of January 2026, the consultation closed over five months ago, signaling imminent final rules that could reshape prudential requirements for crypto firms; non-compliance risks authorization barriers, enforcement, or market exclusion in a regime prioritizing stability amid global crypto growth. This elevates risks for firm failures and consumer harm, demanding immediate gap assessments to align with proportionate standards supporting innovation.
The FCA and PRA are consulting on setting the Financial Services Compensation Scheme (FSCS) Management Expenses Levy Limit (MELL) at £113 million for 2026/27, comprising a £108 million management expenses budget (up £4.4 million from 2025/26, broadly in line with inflation) and a £5 million unlevied reserve. This matters because it caps the operating costs (e.g., IT, staff, legal, claims handling) that FCA- and PRA-authorised firms must fund via levies, excluding separate compensation payments, ensuring FSCS efficiency while controlling firm burdens.
What Changed
- Proposed MELL of £113 million for 2026/27: £108 million budget + £5 million unlevied reserve.
Budget increase of £4.4 million (4%) from 2025/26, aligned with inflation; excluding new revolving credit facility (RCF) enhancement costs, it reflects a £6.6 million nominal and £11 million...
Budget allocated across PRA and FCA fee blocks based on firms' regulated business volume, with smaller firms contributing less.
No changes to compensation levies, which remain separate and forecast at £342 million total levy including compensation.
Suggested Considerations
Review CP26/2 (FCA) and CP1/26 (PRA) alongside FSCS January 2026 Budget Update for allocation details.
Submit feedback on proposed MELL by 10 February 2026 to PRA (email or 20 Moorgate, London EC2R 6DA).
Budget for potential levy payments starting 1 April 2026, based on firm's share of PRA/FCA classes (see Appendix 4 in CP).
Monitor post-consultation Policy Statement/Handbook Notice for final MELL confirmation.
Key Dates
13 January 2026
- Consultation opens (CP26/2 FCA; CP1/26 PRA)
10 February 2026
- Consultation closes; submit comments via email or post to PRA (accepted on behalf of both regulators, shared anonymously with FSCS)
1 April 2026
- Final rules effective (start of FSCS financial year); PRA Policy Statement and FCA Handbook Notice expected post-consultation
31 March 2027
- MELL period ends
Compliance Impact
Urgency: Medium - Firms face predictable levy increases aligned with inflation, with levies allocated by business volume (minimal for small firms), but must act on consultation feedback by 10 February 2026 (today is 25 January 2026, leaving ~2 weeks). Matters for financial planning and budgeting, as MELL ensures FSCS operational funding without covering volatile compensation costs; failure to engage risks unaddressed cost concerns in final rules.
PS1/26 represents the UK Prudential Regulation Authority's final implementation framework for the Basel 3.1 international banking standards, effective 1 January 2027 (with market risk internal models delayed to 1 January 2028). This policy statement establishes mandatory capital, credit risk, operational risk, and market risk requirements for UK-regulated banks, building societies, and investment firms, addressing post-financial crisis shortcomings in risk-weighted asset (RWA) calculations and capital adequacy frameworks.
What Changed
Credit Risk Framework
Implementation of restrictions on Internal Ratings-Based (IRB) approach scope, effective 1 January 2027, with firms required to reclassify certain exposures (e.g., slotting approach IPRE exposures)...
Minor clarifications and amendments to the Standardised Approach and credit risk mitigation techniques.
Operational Risk
Updated Business Indicator Component (BIC) calculation methodology requiring inclusion of the current financial year in the three-year average calculation (or an estimate if unavailable).
Clarifications on legal risk treatment and loss data set dates.
Market Risk (Fundamental Review of the Trading Book – FRTB)
Suggested Considerations
*Immediate (by mid-2026)
*Conduct impact assessment: Quantify RWA changes under Basel 3.1 across credit risk, operational risk, and market risk frameworks.
*Review IRB permissions: Identify exposures requiring reclassification (e.g., IPRE to HVCRE) and prepare permission amendment applications.
*Assess FRTB-IMA readiness: For firms with existing IMA permissions, evaluate transition strategy for out-of-scope positions moving to ASA/SSA during interim period (2027–2027).
*Arrange board-level assurance: Establish governance framework for board oversight of RWA calculation accuracy and Basel 3.1 implementation.
Key Dates
20 January 2026
– PRA publishes PS1/26 (final rules)
2026 ICAAP submission deadlineDEADLINE
– Must include Basel 3.1/SDDT impact assessment
1 January 2027
– Effective date for Basel 3.1 implementation (credit risk, operational risk, reporting/disclosure, IRB scope restrictions, SDDT regime)
1 January 2027
– Interim period begins for FRTB-IMA transition; existing IMA permissions retained; out-of-scope positions move to ASA/SSA
The Prudential Regulation Authority (PRA) has published the final rules for the implementation of Basel 3.1 standards in the UK, with an effective date of January 1, 2027. The rules aim to enhance the resilience of banks and improve the stability of the financial system. Firms must review and update their policies and procedures to ensure compliance with the new requirements.
What Changed
The PRA has introduced new rules for the calculation of risk-weighted assets, including changes to the credit risk standardised approach, market risk framework, and operational risk requirements. The rules also include amendments to the definitions of probability of default, loss given default, and conversion factor.
Suggested Considerations
Review and update credit risk policies and procedures to ensure compliance with the new standardised approach
Assess the impact of the new market risk framework on trading book positions and capital requirements
Update operational risk management frameworks to reflect changes to the Business Indicator and subcomponents
Key Dates
1 Jan 2027DEADLINE
Basel 3.1 rules take effect
1 Jan 2028DEADLINE
Internal model approach for market risk takes effect
Potential Consequences
Non-compliance with the new rules may result in enforcement action, fines, or other regulatory penalties
The PRA's PS2/26 finalizes the retirement of the "refined methodology" in Pillar 2A capital requirements, effective 1 January 2027, aligning with Basel 3.1 implementation to simplify the framework by eliminating an operationally burdensome adjustment originally designed to address conservatism in the standardized approach (SA) to credit risk. This matters for compliance professionals as it reduces complexity in ICAAP and SREP processes, with expected neutral aggregate capital impact, though firm-specific effects may vary and require supervisory engagement.
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...
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...
No further changes from near-final: Confirms PS18/25 near-final policy without alterations; defers certain IRRBB clarifications pending separate review.
Rationale: Reduces operational burden on firms and PRA; PRA analysis shows broadly neutral impact on total capital requirements (TCR), with ~50% of affected firms seeing reductions.
Suggested Considerations
Review and update ICAAP/SREP processes: Firms must integrate retirement into internal capital adequacy assessments, removing refined methodology calculations from Pillar 2A by 1 January 2027.
Recalculate Pillar 2A requirements: Model impacts using Basel 3.1 CR SA; engage PRA supervisors for firm-specific transitions if capital increases anticipated (PRA will apply judgement).
Align with related frameworks: Implement alongside Basel 3.1 (PS1/26), CRR restatement (PS3/26), and SDDT regime (PS4/26); update systems, policies, and disclosures accordingly.
Monitor firm-specific impacts: Conduct quantitative analysis per PRA's refreshed data; half of firms may see TCR reductions, but prepare for potential increases.
Governance and reporting: Board/Senior Managers to oversee transition; ensure 2027 SREP readiness without refined methodology proxy.
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.
The Prudential Regulation Authority (PRA) has finalized the policy to retire the refined methodology to Pillar 2A, which will take effect on January 1, 2027, aligning with the implementation of the Basel 3.1 standards. This change affects all PRA-regulated banks, building societies, and designated investment firms. The refined methodology will no longer apply to these firms, including Small Domestic Deposit Takers (SDDTs), as they will be subject to the Basel 3.1 standardized approach to credit risk.
What Changed
The PRA has retired the refined methodology to Pillar 2A, which was previously used to determine capital requirements for firms. The new policy aligns with the Basel 3.1 standards and introduces a simplified capital regime for SDDTs.
Suggested Considerations
Update internal capital adequacy assessment processes (ICAAP) to reflect the changes to Pillar 2A
Review and implement the Basel 3.1 standardized approach to credit risk
Ensure compliance with the new simplified capital regime for SDDTs, if applicable
Key Dates
1 Jan 2027DEADLINE
The policy to retire the refined methodology to Pillar 2A takes effect, aligning with the implementation of the Basel 3.1 standards
Potential Consequences
Failure to comply with the new policy may result in enforcement action, fines, or other regulatory penalties
PS3/26 is the PRA's final policy statement restating the remaining provisions of the UK Capital Requirements Regulation (CRR) into the PRA Rulebook and related policy materials, effective 1 January 2027. This represents a critical step in the UK's transition away from assimilated EU law, consolidating fragmented regulatory requirements into a unified domestic framework while introducing targeted amendments to securitisation rules and External Credit Assessment Institution (ECAI) mapping.
What Changed
Restatement of CRR Provisions
The PRA is transferring remaining CRR requirements from the UK CRR into the PRA Rulebook without material changes to policy substance, except for targeted securitisation...
New: SS4/24 (Credit risk: Internal Ratings Based Approach), SS3/24 (Credit risk definition of default), SoP6/25 (Internal Model Method permissions), SoP7/25 (Securitisation waivers and permissions),...
Amended: SS15/13 (Groups), SS9/13 (Securitisation: Significant Risk Transfer), SS10/18 (Securitisation: General requirements), and SS10/13 (Credit risk: Standardised Approach)
ECAI Mapping...
Suggested Considerations
*Immediate (by Q2 2026):
*Review applicability: Determine whether your firm falls within the scope of PS3/26 (banks, building societies, designated investment firms, or financial holding companies)
*Assess impact: Analyse how the restatement affects your current compliance framework, particularly regarding credit risk (IRB and standardised approaches), securitisation, and ECAI mapping
*Identify policy changes: Review the new and amended supervisory statements (SS3/24, SS4/24, SoP6/25, SoP7/25, SoP8/25) to understand expectations for permissions, waivers, and model approvals
*Medium-term (by Q3 2026):
Key Dates
28 October 2025
- PS19/25 (near-final policy) published
20 January 2026
- PS3/26 final policy statement published
1 January 2027
- All policies take effect; HM Treasury commencement regulations revoke relevant CRR provisions and replace them with PRA Rulebook rules and policy materials
The Prudential Regulation Authority (PRA) has published a policy statement (PS3/26) that restates the remaining relevant provisions in the Capital Requirements Regulation (CRR) within the PRA Rulebook and other policy materials. This change aims to ensure that the PRA's rules and policies are consistent with the UK's withdrawal from the EU. The policy statement is relevant to PRA-authorised banks, building societies, and other financial institutions.
What Changed
The PRA has restated the remaining relevant provisions in the CRR within the PRA Rulebook and other policy materials, including amendments to supervisory statements and the introduction of new statements of policy. The changes include updates to the securitisation requirements and the introduction of new rules on credit risk and internal ratings-based approaches.
Suggested Considerations
Review and update internal policies and procedures to ensure compliance with the restated CRR provisions
Ensure that risk management practices are aligned with the updated rules on credit risk and internal ratings-based approaches
Review and update securitisation policies and procedures to ensure compliance with the amended requirements
Key Dates
1 Jan 2027DEADLINE
The restated CRR provisions take effect
Potential Consequences
Failure to comply with the restated CRR provisions may result in enforcement action, fines, or other regulatory penalties
Related Regulations
Capital Requirements Regulation (CRR)Basel 3.1Solvency II
PS4/26 finalizes the **simplified capital regime for Small Domestic Deposit Takers (SDDTs)**, a tailored prudential framework designed to reduce regulatory burden while maintaining capital resilience for smaller, domestically-focused UK banks and building societies. This represents the completion of Phase 1 of the PRA's "Strong and Simple" initiative and introduces materially lighter capital, liquidity, and reporting requirements for qualifying firms, with implementation effective January 1, 2027.
What Changed
Simplified Capital Framework
The final policy introduces a dedicated capital regime for SDDTs that descopes them from standard CRR Firms requirements.
Deletion of SoP3/23 (Interim Capital regime) effective January 20, 2026
Removal of SDDTs from scope of SS31/15 and SoP5/15 (standard ICAAP/SREP and Pillar 2 methodologies)
Modified consolidation group certification processes, with responsibility shifting to SDDT consolidation entities
Suggested Considerations
*Immediate (by January 20, 2026):
*Assess SDDT eligibility – Determine whether your firm meets all seven qualification criteria, particularly the £20bn asset threshold and domestic asset location requirement
*Review consolidation group structure – If part of a group, confirm which entity will serve as the SDDT consolidation entity responsible for certification
*Implement SoP2/23 changes – Adopt updated operating procedures for the SDDT regime
*Update ICAAP/ILAAP processes – Implement new frequency requirements for capital and liquidity adequacy assessments
Key Dates
January 20, 2026
– PS4/26 published; changes to SoP2/23 and ICAAP/ILAAP frequency requirements take effect
January 20, 2026
– Revocation of ICR firm/consolidation entity definitions and deletion of SoP3/23 effective
January 1, 2027
– Simplified capital regime for SDDTs takes effect; SS4/25 brought into effect in full; SDDTs removed from SS31/15 scope
The Prudential Regulation Authority (PRA) has introduced a simplified capital regime for Small Domestic Deposit Takers (SDDTs) to reduce regulatory complexity while maintaining adequate capital. The new regime will take effect on 2027-01-01. This change aims to simplify capital requirements for smaller banks and building societies.
What Changed
The PRA has introduced a new simplified capital regime for SDDTs, which includes changes to the PRA Rulebook, supervisory statements, and statements of policy. The regime also introduces new reporting templates and instructions.
Suggested Considerations
Review and update capital adequacy assessments to ensure compliance with the new simplified capital regime
Implement new reporting templates and instructions for SDDTs
Update internal policies and procedures to reflect changes to the PRA Rulebook, supervisory statements, and statements of policy
Key Dates
20 Jan 2026
Publication of the final policy statement
20 Jan 2026
Early implementation of changes to ICAAP updates and reverse stress-testing
1 Jan 2027DEADLINE
The SDDT capital regime takes effect
Potential Consequences
Enforcement action, fines, or license revocation for non-compliance with the new simplified capital regime
The FCA's decision to ban Darren Antony Reynolds from working in financial services and fine him £2,037,892 has been upheld by the Upper Tribunal. The FCA's decision to ban Darren Antony Reynolds from working in financial services and fine him £2,037,892 has been upheld by the Upper Tribunal.Mr Reynolds was dishonest when he gave pension transfer advice and investment recommendations to his customers, causing them significant harm.Mr Reynolds showed a clear disregard for his customers’ intere...
On 16 January 2026, Logic Investments Ltd (Logic Investments) entered special administration. Alex Watkins and Ed Boyle of Interpath Ltd were appointed as joint special administrators. Logic Investments is FCA authorised and regulated to provide wealth management services. On 16 December 2025, Logic Investments agreed to an FCA requirement preventing it from accepting new clients, client money or assets; or moving existing client money or assets without FCA consent. This was done because of c...
The Prudential Regulation Authority (PRA) has today published its supervisory priorities for 2026, outlining in a letter its sector-specific priorities for the coming year to all banks, building societies, insurers and other PRA-regulated firms.
The Financial Conduct Authority, Bank of England and Prudential Regulation Authority (UK regulators) have together signed a Memorandum of Understanding (MoU) with the European Supervisory Authorities to enhance cooperation and oversight of critical third parties (CTPs) that fall under the UK’s CTP regime.
The PRA and FCA have jointly issued consultation paper CP1/26 proposing to set the **Management Expenses Levy Limit (MELL) for the Financial Services Compensation Scheme (FSCS) at £113 million for 2026/27**, comprising a £108 million management expenses budget and a £5 million unlevied reserve. This consultation determines the maximum amount the FSCS can levy on authorised financial services firms to fund its statutory compensation scheme operations, directly affecting compliance costs for all regulated entities.
What Changed
The proposed MELL for 2026/27 introduces the following material changes:
Budget increase of £4.4 million from 2025/26 (from approximately £103.6 million to £108 million), broadly aligned with inflation
Nominal reduction of £6.6 million on a like-for-like basis when excluding the cost of enhancements to the FSCS's revolving credit facility (RCF)
Real terms reduction of £11 million when accounting for inflation adjustments
RCF enhancement to £3 billion to support the Bank of England's recapitalisation powers and enable faster depositor payouts
Suggested Considerations
*Review the consultation paper (CP1/26) in detail, particularly Appendices 3 and 4 detailing budget line items and PRA/FCA funding class allocations
*Assess levy impact on your firm's 2026/27 budget based on your regulated business volume and funding class allocation
*Prepare internal stakeholder communication regarding the £4.4 million aggregate increase and its implications for your firm's regulatory costs
*Monitor the FSCS January 2026 budget update for detailed cost breakdowns and compensation levy forecasts
*Submit consultation responses if your firm wishes to comment on the proposal by 10 February 2026
Key Dates
10 February 2026DEADLINE
– Consultation deadline for comments on CP1/26
1 April 2026
– Effective date: proposed MELL applies from start of FSCS financial year
We reviewed how firms sell complex exchange traded products (ETPs) to retail consumers. Complex ETPs are a subset of the wider ETP market and include high-risk investment strategies that can be difficult for retail consumers to understand.We assessed how firms of different sizes and business models evaluate these products, communicate key risks and monitor outcomes under the Consumer Duty.Given the complexity and risk profile of ETPs, it is essential firms make sure investors have the knowled...
The FCA has secured a confiscation order of £265,523.96 against Andrew Currie. Mr Currie was convicted in 2023 and sentenced to 2 years 6 months imprisonment for defrauding investors through the collapsed peer-to-peer lending platform Collateral (UK) Ltd.He diverted funds from Collateral investors and used them for personal gain, including the purchase of a property in Spain.At a hearing at Southwark Crown Court on 9 January 2026, Mr Currie was ordered to pay £265,523.96. This amount represen...
This Market Notice sets out amendment to the schedule for sales in Q1 2026 of gilts held in the Asset Purchase Facility (APF) for monetary policy purposes.
Statistical Notices update the definitions and guidance contained in the Banking Statistics Yellow Folder
AI Analysis
This Statistical Notice 2026/01 from the Bank of England specifies the submission deadline for the Eligible Liabilities Return form, which calculates firms' contributions to the Bank of England Levy for the 2026/27 levy year. It matters because non-compliance risks penalties, late fees, or enforcement actions under the Financial Services (Banking Reform) Act 2013, ensuring timely funding for the Bank's resolution and stability functions. Compliance teams must integrate this into levy reporting calendars to avoid operational disruptions.
What Changed
The notice updates definitions and guidance in the Banking Statistics Yellow Folder, focusing on the deadline for submitting the Eligible Liabilities Return (ELR) form for the 2026/27 levy year. It does not introduce new substantive rules but reinforces procedural requirements for accurate levy base calculations, such as eligible liabilities as defined in section 15 of the Financial Services (Banking Reform) Act 2013. No specific changes to levy rates or methodologies are detailed, but it aligns with ongoing updates to banking statistics reporting.
Suggested Considerations
Review and calculate eligible liabilities as of 31 December 2026 using BoE definitions from the Yellow Folder.
Submit completed ELR form electronically via BoE portal by the specified deadline (likely 31 January 2027).
Retain audit trails, supporting data, and reconciliations for potential PRA/BoE queries.
Update internal systems and controls for levy calculation; notify compliance teams if data gaps exist.
Monitor BoE portal for form updates or extensions.
Key Dates
31 January 2027DEADLINE
- Deadline for submission of Eligible Liabilities Return form for Levy Year 2026/27 (inferred as standard end-January deadline post-levy year-end, aligned with historical BoE notices; confirm via Yellow Folder for exact day)
Compliance Impact
Urgency: High – Missing the submission deadline triggers automatic late penalties (e.g., interest at Bank Rate + 5%) and potential supervisory referrals. This directly impacts prudential reporting obligations, with firms facing cash flow hits from levy payments (historically £200-300m total annually). Prioritize in Q4 2026 planning, as it coincides with year-end reporting under Basel 3.1 transitions.
On 12 November the PRA hosted a roundtable meeting with Chief Financial Officers (CFOs) of systemically important firms operating in the UK, to discuss Future Banking Data (FBD).
The FCA has fined 2 former finance directors for their part in misleading statements being issued by Carillion plc. Richard Adam and Zafar Khan were both aware of serious financial troubles in Carillion’s UK construction business but failed to reflect this in company announcements or alert the Board and audit committee, leading to poor oversight.Mr Adam and Mr Khan have been fined £232,800 and £138,900, respectively. The fines were imposed after Mr Adam and Mr Khan withdrew their challenges t...
The Money Markets Committee is a forum for market participants and authorities to discuss the UK unsecured deposits and funding market and securities lending and repo markets.
The PRA Regulatory Digest is for people working in the UK financial services industry and highlights key regulatory news and publications delivered for the month.
The Berne Financial Services Agreement (BFSA) is a mutual recognition agreement between the UK and Switzerland, effective from 1 January 2026. This agreement enhances cross-border market access for financial services between the two countries.
The Bank's Court of Directors acts as a unitary board, setting the organisation's strategy and budget and taking key decisions on resourcing and appointments. Required to meet a minimum seven times per year, it has five executive members from the Bank and up to nine non-executive members.
The FCA has removed all regulatory permissions from Verus Financial Services Limited requiring it to stop conducting all regulated activities and imposed a more stringent assets restriction. The action follows concerns that the firm has repeatedly breached an existing asset restriction, which prevented it from selling, transferring or diminishing its assets without our approval. It also failed to comply with a Financial Ombudsman Service decision. We issued a First Supervisory Notice (PDF) on...
The Money Markets Committee is a forum for market participants and authorities to discuss the UK unsecured deposits and funding market and securities lending and repo markets.
Supervisory Statement SS2/25 from the Prudential Regulation Authority (PRA) provides guidance on prudential considerations for UK insurance and reinsurance undertakings transferring risk to Special Purpose Vehicles (SPVs). It clarifies expectations for ensuring such transfers comply with Solvency II requirements, focusing on risk transfer validity, capital relief recognition, and supervisory approval processes. This matters because it aims to enhance transparency and risk management in reinsurance arrangements, reducing potential regulatory arbitrage while supporting efficient risk mitigation for insurers amid evolving market dynamics.
What Changed
- Risk Transfer Validation: Firms must demonstrate that SPV risk transfers provide genuine economic risk transfer (ERT), not just accounting or regulatory capital relief, with PRA emphasizing...
Capital Relief Criteria: Introduces stricter tests for recognizing capital relief, including full collateralization requirements, independent third-party guarantees, and prohibitions on circular...
Governance and Documentation: Mandates robust board-level oversight, detailed transaction documentation (including stress testing and scenario analysis), and pre-transaction PRA notification for...
SPV Oversight: SPVs must be structured to operate independently, with PRA reserving rights to challenge approvals if governance is inadequate or conflicts of interest arise.
Alignment with Solvency II: Builds on existing rules (e.g., Article 211-213) but provides PRA-specific interpretations, including updated expectations on limited risk appetite and post-transfer...
Suggested Considerations
Immediate Review (by Q1 2026): Conduct gap analysis of all existing SPV portfolios against SS2/25 criteria, documenting ERT evidence and collateral adequacy.
Governance Updates: Enhance board policies for SPV approvals, including mandatory stress testing (e.g., 1-in-200 year events) and independent validation by external actuaries.
Pre-Transaction Processes: Implement PRA notification templates for transfers >10% SCR; prepare deal packs with legal opinions on SPV independence.
Reporting Enhancements: Update internal systems for RFR disclosures on SPV exposures; train Senior Insurance Managers (SIMs) on accountability under SIMR.
Remediation: For non-compliant legacy SPVs, unwind or restructure by June 2027, notifying PRA of plans by March 2027.
Compliance Impact
Urgency: High – This is not a full regime shift but imposes immediate review obligations on firms with SPV exposure (estimated 20-30% of PRA-regulated insurers). Non-compliance risks capital add-ons, transaction disapprovals, or enforcement under PRA's Fundamental Rules, especially as PRA ramps up thematic supervision post-2025. Matters for capital efficiency in a high-interest-rate environment where SPVs are popular for cat risk.
Provisional dates for Monetary Policy Committee (MPC) announcements on Bank Rate and publication of MPC meeting minutes and the quarterly Monetary Policy Report.
We’re seeking feedback on whether tailored market risk rules for non-bank trading firms could remove unnecessary barriers, free up capital and attract new market participants, ultimately supporting economic growth. The rules in place today were originally designed for banks to ensure they held enough capital to absorb major trading losses and protect depositors.While that approach is sensible, it means non-bank trading firms face the same standards even though the potential harm from their fa...
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...
Given at the 20th High-level meeting on financial stability and regulatory and supervisory priorities (jointly organised by the Arab Monetary Fund, the Basel Committee on Banking Supervision and the Financial Stability Institute of the Bank of International Settlements).
The Bank of England chairs the London Foreign Exchange Joint Standing Committee (FXJSC), which is a forum for discussion of the wholesale foreign exchange market. The FXJSC is made up of market participants, infrastructure providers and the UK financial regulators.
PS27/25 finalizes the PRA's policy to delete 37 redundant banking regulatory reporting templates (34 FINREP, 2 COREP, and PRA109) as the first phase of the Future Banking Data (FBD) programme, aiming to reduce reporting burdens while maintaining supervisory data quality. This matters for PRA-regulated banks as it delivers immediate cost savings and signals broader regulatory simplification, aligning with the PRA's secondary competitiveness and growth objective.
What Changed
- Deletion of 37 whole reporting templates identified as duplicative, outdated, or low-value: 34 FINREP templates, 2 COREP templates (C05.01 and C05.02, now obsolete), and PRA109.
Consolidation of remaining FINREP scoping provisions into a single section of the PRA Rulebook (new Chapters 5A–5F of the Reporting (CRR) Part), with clarifications to unclear or duplicative...
Alignment of FINREP remittance deadlines to 30 business days for reports under Article 430(3), Article 11(2), and new Chapters 5A–5F.
Updates to Supervisory Statement SS34/15 – Guidelines for completing regulatory reports to reflect deletions and consolidations.
Refinements to the waiver framework for individual UK FINREP reporting in UK consolidation groups (excluding ring-fenced groups), allowing waivers if a single entity contributes 90-95% of group...
Suggested Considerations
Review and update internal reporting systems, processes, and controls to cease submission of the 37 deleted templates for reference dates from 31 December 2025 onwards.
Confirm applicability of consolidated FINREP scoping rules (Chapters 5A–5F) and adjust scoping for remaining templates, incorporating clarified conditions.
Assess eligibility for individual FINREP waivers under the updated framework if part of a UK consolidation group; apply to PRA if criteria met (90-95% asset contribution).
Update compliance policies and training to reflect SS34/15 amendments and aligned remittance deadlines.
Review Pillar 3 disclosure obligations for any ongoing requirements tied to deleted templates and prepare for potential future changes.
Key Dates
11 November 2025DEADLINE
- Q3 2025 remittance deadline (precedes PS publication, so no concession for early non-reporting)
8 December 2025
- Publication of PS27/25, finalizing policy and responses to CP21/25 consultation
31 December 2025
- Effective date for revised rules, amended SS34/15, and deletions; applies to reporting reference dates falling on or after this date (avoids 2025 Q4 submissions where relevant)
Compliance Impact
Urgency: Medium – Changes are simplificatory (deletions reduce burden), with immediate effect from 31 December 2025, but no new requirements or penalties for non-compliance with deleted items; firms must act promptly to decommission processes and avoid erroneous submissions. This matters as it lowers ongoing costs (especially for larger reporters) and sets precedent for FBD phases targeting further efficiencies, but smaller firms see limited benefit without broader reforms.
In line with the Bank's transition to a repo-led, demand-driven operational framework for providing reserves, the Bank is today announcing a reduction in the spread to Bank Rate of the Operational Standing Facility (OSF). This Market Notice confirms the new, recalibrated spread of the OSF at Bank Rate +15bps for the lending facility and Bank Rate -15bps for the deposit facility. As with all SMF facilities, the OSFs are 'open for business' and should be used by SMF participants for the purpose...
A raft of new measures designed to support the growth of the mutuals sector have been announced today by the financial regulators. They include a review of credit union regulations and the launch of a Mutual Societies Development Unit by the Financial Conduct Authority (FCA).
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.
This report has been informed by the PRA and FCA’s ongoing regulation and supervision of mutuals and by direct engagement with mutuals and their trade associations in sessions around the country throughout 2025.
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.
CP22/25 is a consultation paper on post-implementation amendments to UK Solvency II reporting and disclosure requirements, published by the PRA on 4 December 2025. The consultation addresses feedback and queries from insurance firms following the substantial reduction in reporting templates implemented at the end of 2024, clarifying expectations for compliance with the revised Reporting Part of the PRA Rulebook across multiple technical areas including accident/underwriting year reporting, annuity reporting by currency, and internal model governance disclosures.
What Changed
The consultation introduces clarifications and amendments to Solvency II reporting requirements in several critical areas:
Reporting Framework Modifications
Accident or underwriting year reporting: The PRA sets expectations for how firms should apply options within the Reporting Part of the PRA Rulebook regarding temporal classification of claims.
Annuity reporting by currency: Specific guidance on reporting annuities stemming from non-life obligations disaggregated by currency.
RBNS claims development: Clarification on reporting of reported but not settled (RBNS) claims and their development patterns.
Internal Model Requirements
Firms using partial or full internal models for Solvency Capital Requirement (SCR) calculation must describe governance information including responsible roles, specific committees, their tasks,...
Suggested Considerations
*Immediate Actions (January-February 2026):
*Review consultation paper: Obtain and analyze CP22/25 in full to understand proposed amendments
*Assess applicability: Determine which reporting requirements apply to your firm (internal model status, portfolio types, reporting obligations)
*Identify gaps: Compare current reporting processes against PRA expectations outlined in the supervisory statement (SS4015)
*Engage supervisory contacts: Discuss any planned changes to reporting methodology (e.g., accident vs. underwriting year classification) with PRA supervisory contacts prior to implementation
Key Dates
4 December 2025
- PRA published CP22/25 consultation paper
31 December 2025
- Baseline date for commencement of new annual quantitative reporting template requirements (AoC.01) for firms with financial year-end on or after this date
31 December 2025
- Baseline date for commencement of quarterly QMC.01 reporting for internal model firms with financial year-end on or after this date
55 business days after quarterDEADLINE
end; - Deadline for quarterly QMC.01 submission (internal model firms)
100 business days after financial yearDEADLINE
end; - Deadline for annual AoC.01 submission (internal model firms and groups)
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.
Ensure senior accountability and alignment with standards like SS1/21.
Key Dates
3 December 2025
- PS25/25 and SS5/25 published; SS5/25 effective immediately, replacing SS3/19
Within 6 months (by ~June 2026)
- Firms assess gaps against new expectations and develop remediation plans (industry guidance)
Ongoing
- Forward-looking, strategic implementation proportionate to risks; PRA may request progress evidence
Compliance Impact
Urgency: High – Effective immediately (3 Dec 2025), requiring significant uplift to existing approaches; non-compliance risks supervisory scrutiny, as PRA expects ambitious, ongoing progress and may request evidence. Matters for capital/liquidity planning, resilience, and strategic viability amid maturing climate risk landscape.
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).
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
April 2025
Consultation paper CP10/25 issued (feedback incorporated in final policy)
Within 6 months of 3 December 2025 (by ~3 June 2026)
Firms assess gaps against new expectations and develop implementation plans
3 December 2025
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.
Our Financial Policy Committee (FPC) meets to identify risks to financial stability and agree policy actions aimed at safeguarding the resilience of the UK financial system.
The PRA Regulatory Digest is for people working in the UK financial services industry and highlights key regulatory news and publications delivered for the month.
PS23/25 from the PRA and FCA finalizes amendments to Binding Technical Standards (BTS) 2016/2251 under UK EMIR, introducing an indefinite exemption for single-stock equity options and index options from bilateral margin requirements, removing IM obligations on legacy contracts for firms falling below thresholds, and allowing alignment with third-country jurisdictions' timelines for IM assessments. These changes reduce operational burdens and enhance competitiveness for UK firms trading non-centrally cleared derivatives, following feedback from CP5/25, while maintaining prudential standards.
What Changed
- Indefinite exemption for equity options: Single-stock equity options and index options are permanently exempted from UK bilateral initial margin (IM) and variation margin (VM) requirements,...
Legacy contracts relief: Firms falling below the Average Aggregate Notional Amount (AANA) threshold no longer need to exchange IM on outstanding legacy non-centrally cleared derivatives contracts.
Third-country alignment: UK firms can adopt another jurisdiction’s threshold calculation periods and entry-into-scope dates for IM requirements when trading with counterparties subject to that...
Minor drafting tweaks for consistency between PRA and FCA instruments, including FCA adding text on releasing collected IM, with no policy impact.
Suggested Considerations
Review and update internal policies, procedures, and systems to cease IM/VM exchange for exempted single-stock equity options and index options post-27 November 2025; confirm no ongoing obligations for legacy contracts if below AANA thresholds.
Assess cross-border transactions: Document use of third-country jurisdictions’ timelines for IM thresholds where applicable, ensuring compliance with UK rules remains intact.
Conduct gap analysis on margin calculations, collateral management, and reporting; train front-to-back office teams on changes.
Retain records of AANA calculations and threshold monitoring to justify exemptions or relief.
For firms with collected IM on now-exempt legacy positions, evaluate release options per updated FCA instrument language.
Compliance Impact
Urgency: High – Effective immediately since 27 November 2025 (over a month ago as of current date), firms risk non-compliance if systems still enforce outdated IM/VM for exemptions; operational fixes are needed urgently to avoid breaches, fines, or disputes, especially with phase-out of temporary equity options relief approaching 4 January 2026. Impacts cost savings but requires swift policy recalibration for ongoing UK EMIR adherence.
The Bank of England welcomes the Financial Conduct Authority (FCA) recognition of the 2024 versions of the FX Global Code and UK Money Markets Code under its code recognition scheme.
The PRA held roundtable meetings on artificial intelligence and machine learning (AI and ML) in the context of Supervisory Statement (SS)1/23 ‘Model risk management principles for banks’
AI Analysis
The Prudential Regulation Authority (PRA) held roundtable sessions on 20 and 22 October 2025 with 21 regulated firms to discuss AI and machine learning (AI/ML) adoption under Supervisory Statement SS1/23 on model risk management (MRM) principles for banks. This matters because it highlights PRA's strategic supervisory focus on AI/ML model risks, urging firms to enhance governance, risk appetite, monitoring, and validation to mitigate opacity, overfitting, and rapid performance degradation in these models. https://www.bankofengland.co.uk/prudential-regulation/publication/2025/november/pra-holds-model-risk-management-roundtable-on-ai | https://www.bankofengland.co.uk/-/media/boe/files/prudential-regulation/publication/2025/november/ai-roundtable-oct-2025.pdf
What Changed
This is not a formal rule change but supervisory guidance via roundtable insights reinforcing SS1/23 principles (effective since 2023). Key emphases include:
Risk appetite: Boards must articulate AI/ML-specific model risk appetite pre-deployment to avoid exceeding tolerances, given higher uncertainty from opacity.
Model inventories and tiering: Address inaccurate/incomplete inventories and aggregate risks from deploying similar AI/ML across portfolios/jurisdictions; challenge tiering for complexity.
Model development: Assess trade-offs in performance vs. explainability/reliability; prefer simpler models where AI/ML gains are marginal; mitigate overfitting via representative datasets.
Ongoing monitoring: Increase frequency beyond tier-dependent intervals (e.g., six months may suffice for traditional models but not dynamic AI/ML); define quantitative triggers for re-validation.
Suggested Considerations
Review and strengthen board-level model risk appetite statements to explicitly cover AI/ML opacity and uncertainty; integrate into governance triggers like re-validation.
Enhance model inventories for completeness, aggregate risk assessment, and cross-jurisdictional tiering challenges.
Update model development policies to evaluate AI/ML trade-offs (e.g., explainability vs. performance) and ensure datasets prevent overfitting.
Revise ongoing monitoring policies for more frequent, quantitative checks on AI/ML (e.g., beyond six months); define degradation triggers, fallback models, and kill switches.
Participate in PRA initiatives like MRM roundtables or AI Consortium for dialogue; align first/second-line defenses per SS1/23.
Key Dates
24 November 2025
- PRA published roundtable summary and slides. https://www.bankofengland.co.uk/prudential-regulation/publication/2025/november/pra-holds-model-risk-management-roundtable-on-ai
20
22 October 2025; - PRA held CRO roundtable sessions with 21 firms on AI/ML MRM
Compliance Impact
Urgency: Medium - Not critical as no new rules or deadlines, but high relevance for AI/ML users amid PRA's strategic MRM focus; non-compliance risks supervisory actions, given observations of gaps in monitoring and governance. Matters for banks scaling AI (rising adoption per industry views), as unaddressed risks like rapid degradation could amplify losses (e.g., historical model failures cost billions). https://www.articsledge.com/post/model-risk-management | https://www.finextra.com/blogposting/30372/the-pras-latest-view-on-ai-governance-implications-for-uk-banks
From the start of December, UK bank customers will benefit from an increase to the maximum amount they would be reimbursed for if their bank were to fail
The PRA's PS24/25 finalizes rules increasing Financial Services Compensation Scheme (FSCS) depositor protection limits from £85,000 to £120,000 and temporary high balances (THB) from £1 million to £1.4 million for firm failures on or after 1 December 2025, responding to consultation feedback in CP4/25. This matters for PRA-authorized deposit-takers as it enhances consumer protection amid inflation but requires urgent system and disclosure updates to avoid FSCS payout delays or regulatory breaches. Firms must prioritize single customer view (SCV) readiness and phased disclosure revisions to comply efficiently.
What Changed
- Increased Protection Limits: Standard FSCS deposit limit rises from £85,000 to £120,000; THB limit from £1 million to £1.4 million, applying to failures from 1 December 2025.
SCV System Updates: Firms must update SCV systems (used by FSCS for rapid compensation) to reflect new limits from 1 December 2025, including accurate contact details.
Disclosure Materials:
- Update information sheets on FSCS cover to reflect new limits and improve clarity/accessibility; provide to depositors as soon as practicable post-1 December 2025, by 31...
Rulebook Amendments (DPP Rules): Exclude FSCS sticker/poster display in branches without in-person depositor dealings; tighten "third-party premises" scope (e.g., banking hubs); other clarifications.
Supervisory Updates: SS18/15 and SoP1/15 amended for new rules, effective 1 December 2025, with guidance on third-party premises.
Suggested Considerations
Immediate (pre-1 Dec 2025): Test and prepare SCV systems for new limits; review current contact data accuracy.
By 1 Dec 2025: Implement SCV updates; apply amended SS18/15 and SoP1/15.
Post-1 Dec 2025 to 31 May 2026: Revise and distribute updated information sheets, compensation stickers/posters (excluding non-in-person branches), and simplified exclusions lists; no proactive customer notification required but provide on request/in relevant circumstances.
Ongoing: Ensure disclosures remain clear/accessible; monitor for PRA feedback on banking hub models.
Document changes for audit trails; consider regtech for SCV automation.
Key Dates
1 December 2025DEADLINE
- New deposit (£120,000) and THB (£1.4 million) limits apply to firm failures on/after this date; SCV systems must be updated; SS18/15 and SoP1/15 effective
As soon as practicable after 1 December 2025
- Provide updated information sheets, stickers/posters, and exclusions lists to depositors (encouraged immediately to avoid confusion)
31 May 2026DEADLINE
- Firm deadline for all disclosure material updates and provision to depositors (six-month transition ends)
Compliance Impact
Urgency: High – SCV updates are mandatory by 1 December 2025 with no transition, risking delayed FSCS payouts and enforcement if unprepared; disclosure changes allow six months but PRA emphasizes early action to prevent depositor confusion. Impacts operational resilience and conduct risk; non-compliance could trigger supervisory action, especially for firms with outdated systems. Cost-benefit analysis shows minimal PRA impact but higher potential FSCS payouts in failures.
This is the first exercise conducted under the new Solvency UK regulatory regime implemented in 2024. The PRA published sector-level results on 17 November 2025 followed by individual firm disclosure for the core scenario on 24 November 2025.
The PRA's Discussion Paper 2/25 (published November 14, 2025) invites UK life insurers to provide feedback on potential regulatory reforms that would enable them to access **alternative forms of capital through risk transfer to capital markets**, outside traditional equity and debt issuance. This initiative aims to address capital constraints in the UK life insurance sector while maintaining policyholder protection and supporting long-term economic growth.
What Changed
The PRA is considering policy reforms centered on six core principles:
Capital Quality & Quantity: Alternative life capital structures must not lower the quality or quantity of capital required to support insurance risks.
Risk Transfer Focus: Structures should enable patient capital investment aligned with long-term liability profiles, allowing investors to forgo immediate returns for substantial future gains.
Capital Relief Priority: Alternative life capital should predominantly deliver capital relief proportionate to actual risk transfer—not balance sheet financing or illiquidity...
Suggested Considerations
*For UK life insurers:
*Assess capital needs: Evaluate whether alternative capital structures could address your firm's capital constraints, risk management objectives, or product innovation goals.
*Prepare consultation response: Submit detailed feedback to the PRA by 6 February 2026 addressing the 15 consultation questions, particularly:
Q12: Key risks from increased capital flexibility and mitigation approaches
Q13: Views on balancing ease of authorisation against ongoing supervision intensity
Key Dates
14 November 2025
– Discussion paper published
2026
– PRA planned policy design and cost-benefit analysis (alongside HM Treasury work)
The Bank of England, the Monetary Authority of Singapore, and the Bank of Thailand announced a collaboration to explore the technical and policy implications of settling foreign exchange (FX) transactions using synchronised settlement mechanisms.
This was the first meeting of the Market Participants Group (MPG), a senior-level forum for financial market participants to share their views on relevant themes and narratives in financial markets with members of the Bank of England’s Monetary Policy Committee.
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
5 March 2025
- PRA publishes Consultation Paper CP2/25 proposing £70 billion threshold
5 June 2025DEADLINE
- Consultation response deadline
12 November 2025
- PRA issues PS22/25 with final policy
1 January 2026
- Final policy takes effect, applying new £75 billion threshold and three-year averaging
30 June 2026
- Cessation of modifications by consent disapplying leverage ratio rules
Compliance Impact
Urgency: High – With effectiveness just after today (1 January 2026), firms near £50-75 billion in retail deposits face immediate recalibration of leverage exposures and capital buffers to avoid breaches, amplified by the shift to averaging which requires historical data reconstruction. Non-compliance risks PRA enforcement, heightened scrutiny, or capital inadequacy findings, but the higher threshold and averaging provide planning relief versus the status quo.
The Money Markets Committee is a forum for market participants and authorities to discuss the UK unsecured deposits and funding market and securities lending and repo markets.
The Bank of England (the Bank) has today published a consultation paper (CP) setting out its proposed regulatory regime for sterling-denominated systemic stablecoins.
AI Analysis
The Bank of England has published a consultation paper (issued November 10, 2025) proposing a comprehensive regulatory regime for **sterling-denominated systemic stablecoins**, establishing requirements for backing assets, capital, redemption procedures, and operational safeguards. This represents a pivotal step toward implementing the UK's stablecoin framework, with the regime designed to maintain financial stability while enabling viable business models for systemic stablecoin issuers.
What Changed
The proposed regulatory regime introduces several material requirements for systemic stablecoin issuers:
Backing Asset Composition
Systemic stablecoin issuers will be permitted to hold up to 60% of backing assets in short-term sterling-denominated UK government debt, with the remaining 40% held as deposits at the Bank of England.
Suggested Considerations
*For Systemic Stablecoin Issuers:
*Monitor and respond to consultation - Submit detailed comments on proposals before February 2026 deadline, particularly on:
Alternative tools to achieve regulatory objectives
Backing asset composition and holding limits
Safeguarding regime design
Key Dates
November 10, 2025
- Bank of England published consultation paper on proposed regulatory regime
2026
- Expected implementation of UK stablecoin regime (timeline subject to consultation outcomes)
February 2026DEADLINE
- Consultation deadline (industry to submit comments)
Further consultation expected
- On detailed design of safeguarding regime and central bank liquidity arrangements
The SONIA Stakeholder Advisory Group supports the Bank’s administration of SONIA by providing advice and technical input to the Bank and the SONIA Oversight Committee
This Market Notice confirms that the previously announced increase to the minimum spread over Bank Rate on bids against Level A collateral in the Indexed Long-Term Repo (ILTR) operation will take effect from 17 November 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.
The Bank's Court of Directors acts as a unitary board, setting the organisation's strategy and budget and taking key decisions on resourcing and appointments. Required to meet a minimum seven times per year, it has five executive members from the Bank and up to nine non-executive members.
The Financial Policy Committee (FPC) welcomes today the Prudential Regulation Authority’s (PRA’s) policy statement 20/25 – The Strong and Simple Framework: The simplified capital regime for Small Domestic Deposit Takers (SDDTs) – near-final.
AI Analysis
The Financial Policy Committee (FPC) welcomes the Prudential Regulation Authority's (PRA) Policy Statement (PS) 20/25, which finalizes the second phase of the "Strong and Simple Framework" by introducing a simplified capital regime for Small Domestic Deposit Takers (SDDTs), alongside liquidity simplifications. This matters because it reduces regulatory burdens, enhances competition among smaller UK banks and building societies, and maintains resilience without full Basel 3.1 standards, with implementation on 1 January 2027.
What Changed
- Pillar 1 simplifications: Adoption of Basel 3.1 standardised approaches to credit and operational risk; disapplication of due diligence for credit risk, simplifications to market risk, removal of...
Pillar 2A methodologies: Simplifications for credit risk, credit concentration risk (CCoR), and operational risk; amendments to single-name concentration monitoring (cluster limit tightened to 200%,...
Capital buffers: Introduction of a new Single Capital Buffer (SCB) replacing the Capital Conservation Buffer (CCoB), Countercyclical Capital Buffer (CCyB), and PRA buffer; removal of CCyB adjustment...
Stress testing and reporting: Replacement of cyclical stress testing with non-cyclical framework; increased descoped reporting templates from 38 to 51, plus SDDT-specific versions of four templates.
Revocation of Interim Capital Regime (ICR): Firms opting into ICR must transition to full Basel 3.1 on 1 January 2026 or SDDT regime on 1 January 2027.
Suggested Considerations
Assess SDDT eligibility: Confirm if firm meets scope criteria from PS15/23; decide between SDDT regime or full Basel 3.1.
Update capital frameworks: Implement Pillar 1/2A simplifications, SCB, and reporting changes; recalibrate risk-weighted assets, buffers, and stress testing.
ICR transitions: If applicable, prepare for 1 January 2026 Basel 3.1 shift or 1 January 2027 SDDT entry; cease ICR reliance.
Policy and process revisions: Revise ICAAP/ILAAP per 20 January 2026 changes; adapt reporting (51 descoped templates).
Supervisory engagement: Monitor CCoR cluster limits (200% trigger); engage PRA on Pillar 2A via CP12/25.
Key Dates
17 January 2025DEADLINE
Deadline for comments on related CP14/24
28 October 2025
Publication of near-final PS20/25
1 January 2026
Full Basel 3.1 standards apply to ICR opt-in firms (ICR revoked); some changes to SoP2/23, ICAAP/ILAAP update frequencies effective from PS4/26 publication
20 January 2026
Publication of final PS4/26 confirming PS20/25; effective date for ICAAP/ILAAP updates (including reverse stress-testing)
1 January 2027
Simplified capital regime for SDDTs takes full effect
Compliance Impact
Urgency: High – With full implementation on 1 January 2027 (less than 12 months from today), SDDTs face tight timelines for capital recalibrations, ICR exits, and reporting overhauls; missing deadlines risks supervisory intervention or full Basel 3.1 compliance costs. This significantly eases burdens (e.g., simpler buffers, reduced reporting) but requires proactive gap analysis to leverage simplifications while ensuring resilience.
**PS19/25** is the PRA's near-final policy statement finalizing how remaining Capital Requirements Regulation (CRR) provisions will be restated into the PRA Rulebook, effective January 1, 2027. This represents a critical step in the UK's transition away from assimilated EU law, giving the PRA expanded rule-making authority over UK banks, building societies, and investment firms while introducing targeted policy changes to securitisation, credit risk treatment, and ECAI mapping.
What Changed
The near-final policy confirms and finalizes the following substantive amendments:
Securitisation Requirements
Largely preserves current requirements and supervisory expectations with targeted policy changes
Introduces a new formulaic p-factor for the standardised approach to securitisation
Establishes new capital rules for certain mortgage exposures
Clarifies supervisory expectations for unfunded credit protection in synthetic Significant Risk Transfer (SRT) securitisations by adding expectations to SS9/13
Level of Application of CRR...
Suggested Considerations
*Review the final policy statement when published in Q1 2026 to understand specific rule changes applicable to your firm's business model
*Assess securitisation impacts: If your firm engages in securitisation activities, particularly synthetic SRT structures with unfunded credit protection, evaluate compliance with clarified supervisory expectations in SS9/13
*Evaluate mortgage capital treatment: Firms with significant mortgage lending should assess impact of new capital rules for certain mortgage exposures
*Update ECAI mapping processes: Firms relying on external credit assessments must prepare for amendments reflecting Basel 3.1 implementation
*Establish implementation timeline: Develop a project plan for January 1, 2027 implementation, including:
Key Dates
28 October 2025
- PRA published near-final policy statement PS19/25
Q1 2026
- PRA intends to publish final policies and rule instruments alongside or shortly after final Basel 3.1 package publication
1 January 2026
- Implementation date for certain proposals finalized in PS12/25 (limited scope)
1 January 2027
- Implementation date for policies and requirements in PS19/25 (primary implementation date)
PS18/25, published by the PRA on 28 October 2025, retires the "refined methodology" for Pillar 2A capital calculations, replacing it with reliance on the Basel 3.1 Credit Risk Standardised Approach (CR SA) for greater risk sensitivity, transparency, and proportionality. This near-final policy simplifies the Pillar 2A framework, reduces administrative burdens, and aligns with broader Basel 3.1 implementation and the Strong and Simple regime for Small Domestic Deposit Takers (SDDTs), promoting safety, soundness, and competition. It matters because it directly impacts credit risk capital add-ons for affected firms, requiring updates to ICAAP/SREP processes ahead of Basel 3.1 timelines.
What Changed
- Retirement of Refined Methodology: Eliminates supervisory adjustments to Pillar 2A credit risk add-ons based on IRB benchmarking, as Basel 3.1 CR SA better captures risks and reduces gaps between...
Policy Material Updates:
- Near-final amendments to Statement of Policy (SoP) 5/15 – The PRA’s methodologies for setting Pillar 2 capital.
- Final amendments to Supervisory Statement (SS) 31/15 –...
IRRBB and Pension Obligation Risk: Clarifications only (no substantive changes); minor IRRBB updates in SS31/15 deferred due to ongoing review (CP12/25 Phase 1); pension risk amendments finalized.
Future Alignment: Proposals from CP12/25 (e.g., removing IRB benchmarking, streamlining FSA076/FSA077 reporting) to be finalized in Q2 2026 PS, not reflected here.
Suggested Considerations
Review and update internal Pillar 2A methodologies, ICAAP/SREP documentation to remove refined methodology reliance and align with Basel 3.1 CR SA.
For SDDTs: Transition to SoP5/25 and SS4/25; assess impacts from PS20/25 overlap.
Model/calculate potential capital impacts from CR SA changes vs. prior IRB benchmarking adjustments.
Prepare for IRRBB/pension risk clarifications in SS31/15 submissions from 1 July 2026; monitor CP12/25 review.
Engage PRA supervisors on firm-specific transitions; update reporting (e.g., anticipate FSA076 streamlining).
Key Dates
28 October 2025
- PS18/25 publication with near-final policy and PRA feedback to CP9/24/CP7/24 consultations
January 2026
- PS2/26 published as final policy, minor adjustment to SS31/15 para 5.12A
Q2 2026
- Expected finalisation of CP12/25 Phase 1 proposals (Pillar 2A review, including IRB benchmarking removal)
1 July 2026
- Effective date for pension obligation risk amendments in SoP5/15 and SS31/15 clarifications (IRRBB changes partially deferred)
Basel 3.1 Implementation Date (TBD, aligned with CR SA go
live); - Retirement of refined methodology and related credit/operational risk changes
Compliance Impact
Urgency: High – Firms must act now to recalibrate Pillar 2A capital ahead of Basel 3.1 and 1 July 2026 effective dates, as retirement eliminates adjustments that reduced add-ons for low-risk CR SA firms, potentially increasing capital requirements despite Basel 3.1 offsets. Non-compliance risks supervisory scrutiny in SREP/ICAAP, higher Pillar 2A requirements, and misalignment with simplified regimes; benefits include reduced complexity/burden long-term.
SS31/15 is the PRA's foundational supervisory statement establishing expectations for how UK-regulated banks and large investment firms must conduct their Internal Capital Adequacy Assessment Process (ICAAP) and how the PRA will evaluate these assessments through its Supervisory Review and Evaluation Process (SREP). This guidance is critical because it directly determines the capital requirements firms must maintain and establishes the supervisory framework through which the PRA assesses whether firms hold sufficient capital to cover material risks.
What Changed
The supervisory statement establishes several core regulatory expectations:
ICAAP Requirements
Firms must assess on an ongoing basis whether they hold sufficient capital to cover all material risks, including interest rate risk in the banking book (IRRBB), market risk, operational risk,...
Firms must implement stress testing and scenario analysis as integral components of capital planning
The management body must be actively involved and engaged in all relevant stages of the ICAAP process
SREP Assessment Framework
The PRA reviews and evaluates:
Arrangements, strategies, processes and mechanisms implemented by a firm to comply with regulatory requirements
Suggested Considerations
*Immediate Compliance Actions
*Establish ICAAP Framework: Implement a comprehensive ICAAP that covers all material risks identified by the firm and the PRA, including those specific to the firm's business model and risk profile
*Risk Identification and Assessment: Conduct thorough identification of all material risks (IRRBB, market risk, operational risk, concentration risk, group risk, pension obligations, foreign currency lending) and assess capital adequacy against these risks
*Stress Testing and Scenario Analysis: Develop and maintain robust stress testing and scenario analysis capabilities, including:
Results of stress tests carried out in accordance with CRR requirements for firms using IRB approaches or internal models
Key Dates
29 July 2015
- SS31/15 first published, replacing PRA SS5/13 and PRA SS6/13
1 July 2026
- Effective date for updates to SS31/15 (as referenced in recent amendments)
OngoingDEADLINE
- Firms must carry out ICAAP on a continuous basis in accordance with PRA ICAA rules
**PS20/25** represents the second and final phase of the PRA's "Strong and Simple Framework," establishing a significantly simplified capital regime for Small Domestic Deposit Takers (SDDTs) while maintaining their resilience. This near-final policy statement, published on 28 October 2025, fundamentally restructures capital requirements, liquidity rules, and operational frameworks for SDDTs—a critical development for smaller deposit-taking institutions seeking regulatory relief from disproportionate compliance burdens.
What Changed
The simplified capital regime introduces structural changes across all three pillars of capital requirements:
Pillar 1 (Risk-Weighted Assets)
SDDTs must apply Basel 3.1 standardised approaches for credit risk and operational risk, with specific simplifications.
Due diligence requirements in the standardised approach to credit risk are disapplied for SDDTs.
Counterparty credit risk (CCR) for derivatives and credit valuation adjustment (CVA) risk are disapplied (with minor exceptions).
Market risk framework is simplified, with SDDTs applying the credit risk approach to trading book positions and removal of foreign-exchange and commodity risk capital requirements.
Suggested Considerations
*For SDDTs Currently Operating or Considering Entry:
*Notification Decision – Determine whether to enter the SDDT regime and submit notification to the PRA by 31 March 2026 if seeking to benefit from simplified rules.
*Policy Review – Conduct comprehensive review of PS20/25, related policy statements (PS18/25, PS19/25, PS8/25, PS14/25), and supporting methodologies (SoP5/25, SS4/25, amendments to SoP2/23).
*Capital Calculation Transition – Prepare systems and processes to transition from current capital calculation methodologies to Basel 3.1 standardised approaches with SDDT simplifications, including:
Removal of CCR and CVA calculations for derivatives
Key Dates
2026 (specific date TBD)
– PRA to make final rules and policy covering the entire Basel 3.1 package once HM Treasury makes commencement regulations to revoke relevant CRR provisions
31 March 2026DEADLINE
– Deadline for firms wishing to enter the SDDT regime to notify the PRA and benefit from the simplified framework at implementation
1 January 2027
– Implementation date for the simplified capital regime for SDDTs; the Interim Capital Regime will no longer apply
2027 (specific date TBD)
– PRA to implement restatement of CRR requirements (PS19/25)
PS17/25 establishes the **Matching Adjustment Investment Accelerator (MAIA) framework**, enabling PRA-regulated insurers to regularize and expand their use of matching adjustment (MA) in calculating capital requirements for certain long-duration insurance liabilities. This framework is significant because it provides a structured pathway for firms to optimize capital efficiency while maintaining prudential safeguards through exposure limits, eligibility assessments, and breach remediation mechanisms.
What Changed
The MAIA framework introduces the following regulatory requirements:
Permission and Eligibility Framework
Firms must obtain explicit MAIA permission from the PRA to use the accelerator
Permission grants authority to regularize previously non-compliant MA assets and apply MA to new eligible assets within defined parameters
Exposure Limits
Firms receive fixed monetary exposure limits calibrated using the Best Estimate of Liabilities (BEL) of the MA portfolio, net of reinsurance, at the time of permission grant
Limits remain fixed until the next formal variation of MAIA permission
Asset Eligibility and Assessment
Suggested Considerations
*Immediate (Q4 2025 - Q1 2026):
*Assess eligibility for MAIA permission by reviewing current MA portfolio and prospective assets
The PRA has published LIAC02/25, a consultation on proposed low impact amendments to rules and policy.
AI Analysis
The PRA's LIAC02/25 consultation, published on 16 October 2025, proposes low-impact amendments to its Rulebook and policy materials, including technical fixes, conditional disapplications, and miscellaneous corrections to enhance accuracy and align with prior policies. These changes matter for PRA-regulated firms as they ensure regulatory consistency with minimal operational burden, with most taking effect in late 2025 or early 2026 following the consultation period.
What Changed
The main proposals include:
Conditional disapplication of PRA General Provisions to implement deference arrangements under the UK-Swiss Berne Financial Services Agreement.
Amendment to Transitional Measure on Technical Provisions (TMTP) Part, Rule 5.2, introducing a new formula for 'Wr' effective 31 December 2025, using existing 'Wq' values without retrospective...
Amendment to Insurance Special Purpose Vehicle (ISPV) Part, Solvency Requirements Rule 2.2A(3), clarifying the 'no co-mingling' requirement, effective 23 December 2025, alongside updates to SS2/25.
Miscellaneous amendments to the PRA Rulebook, such as glossary updates, fundamental rules, general provisions, interpretation, notifications, and policyholder protection parts.
Amendments made...
Suggested Considerations
Submit consultation responses by 13 November 2025 via the PRA's Low Impact Amendments Process page, focusing on proposed disapplications, TMTP formula, ISPV rules, and miscellaneous changes.
Review and update internal policies for TMTP calculations to adopt the new 'Wr' formula from 31 December 2025 year-end, without restating priors.
Confirm compliance with ISPV 'no co-mingling' clarifications and SS2/25 updates by 23 December 2025.
Verify Rulebook references (e.g., Securitisation, parent undertakings) and adjust systems for effective dates like 19 January 2026.
For friendly societies/credit unions: Note zero minimum fees already reflected in 2025/26 invoices; no further action needed.
Compliance Impact
Urgency: Low – These are explicitly "low impact" technical, typographical, and alignment amendments with no material capital, reporting, or operational shifts expected; many stem from prior consultations (e.g., CP8/25, CP12/23, PS10/25) and avoid retrospective changes. Firms should act promptly on response deadlines and upcoming effectives (e.g., December 2025) to prevent minor non-compliance, but resource allocation can be minimal given the non-substantive nature.
The PRA and FCA have today confirmed plans to increase flexibility around senior banker pay, alongside changes to create better links between bonus awards and responsible risk-taking.
PS21/25 implements reforms to PRA remuneration rules for banks, building societies, and PRA-designated investment firms, simplifying Material Risk Taker (MRT) identification, aligning deferral periods with international standards (4 years for non-SMF MRTs and 5 years for SMFs), and enhancing links to individual accountability under the Senior Managers Regime (SMR). These changes matter as they reduce regulatory burden, increase flexibility in bonus structures (e.g., marginal deferral rates and cash payments), and promote competitiveness while maintaining risk alignment, potentially reversing trends toward higher fixed pay.
What Changed
- MRT Identification: Simplified quantitative threshold to the top 0.3% of earners (assessed against risk impact); qualitative criteria unchanged; raised proportionality threshold for disapplying...
Deferral Periods: 4-year minimum for non-SMF MRTs (previously varied); reduced to 5 years for SMFs (from 7 years); aligns with FCA and international practice.
Deferral Rates: Marginal system—40% deferral on first £660,000 of variable remuneration, 60% above; replaces cliff-edge approach for proportionality.
Upfront Cash Flexibility: Removed equal cash/instrument split requirement (Remuneration 15.16 deleted); deferred portion should have higher instrument share as good practice (new SS2/17 para 5.44B);...
Individual Accountability: New rules/expectations for adjusting remuneration up the management chain for adverse outcomes; senior management accountable against PRA priorities; Remuneration...
Suggested Considerations
Review and update MRT identification processes, applying simplified top 0.3% threshold and new proportionality exemptions.
Revise remuneration policies for deferral (4/5 years, marginal rates), upfront cash flexibility, and instrument expectations; update bonus award calculations.
Embed SMR-linked adjustments: Define criteria for chain-wide pay reductions on adverse outcomes; align Remuneration Committee oversight with PRA priorities and risk events.
For dual-regulated firms: Transition to PRA-cross-referenced FCA rules (SYSC 19D).
Optional early adoption for specified changes on 2025/unvested awards; document governance for RemCo approvals and board policies.
Key Dates
November 2024
Preceding joint consultation (CP16/24/PRA, CP24/23/FCA) closed prior to PS
15 October 2025
Publication date; some changes (e.g., deferral periods, pro-rata vesting) may apply to ongoing 2025 performance year and unvested prior awards at firm discretion
16 October 2025
Final rules and updated SS2/17 take effect; apply to performance years starting after this date (e.g., mandatory from 1 January 2026 for calendar-year firms)
Compliance Impact
Urgency: High – Mandatory from performance years post-16 October 2025 (e.g., 2026 for most), with immediate opt-in possible; impacts 2026 bonus cycles, requiring swift policy rewrites amid year-end planning. Matters due to simplified but ownership-heavy MRT processes, SMR-pay linkages raising accountability risks, and flexibility needing robust justification to avoid supervisory challenge; non-compliance risks enforcement under PRA accountability regimes.
Our Financial Policy Committee (FPC) meets to identify risks to financial stability and agree policy actions aimed at safeguarding the resilience of the UK financial system.
Not for distribution, directly or indirectly, in or into the United States, Canada, Australia, Japan or any other jurisdiction where it is unlawful to distribute this announcement.
The PRA Regulatory Digest is for people working in the UK financial services industry and highlights key regulatory news and publications delivered for the month.
PS15/25 introduces **new liquidity risk reporting requirements for major UK insurance firms**, closing data gaps identified during the March 2020 "dash for cash" and September 2022 LDI crisis. The policy mandates four new reporting templates for firms with significant derivatives or securities lending exposure, with implementation deferred to **30 September 2026** to allow adequate preparation time.
What Changed
The PRA's final policy establishes the following regulatory framework:
New Reporting Templates
Four new liquidity reporting templates have been introduced to capture previously unavailable data:
Annual committed facilities template
Monthly cash-flow mismatch template (short form)
Monthly cash-flow mismatch template for ring-fenced funds, matching adjustment portfolios, and remaining parts
Additional supervisory reporting requirements
Scope and Thresholds
Firms are subject to liquidity reporting if they meet both of the following conditions:
Suggested Considerations
*Immediate Actions (by Q2 2026):
*Threshold Assessment: Determine whether your firm meets the £10 billion derivatives or £1 billion securities lending thresholds
*RFF Mapping: If applicable, identify ring-fenced funds with £500 million+ gross notional derivatives exposure
*System Readiness: Begin implementing technical infrastructure for monthly and daily reporting submissions
*Data Governance: Establish processes to capture and validate liquidity data in the required templates
Key Dates
30 September 2025
- PRA published PS15/25 (policy statement)
31 December 2025DEADLINE
- Original implementation deadline (now superseded)
30 September 2026
- **Final implementation date for all liquidity reporting requirements**
First reporting reference date after 30 September 2026DEADLINE
- Firms meeting threshold conditions must commence reporting
Three consecutive annual reporting reference dates
- Threshold for ceasing reporting once firms fall below thresholds
SS15/16 establishes the PRA's expectations for UK insurance firms using approved internal models to calculate their Solvency Capital Requirement (SCR), requiring them to maintain the ability to calculate SCR using the standard formula and submit standard formula SCR calculations for regulatory monitoring purposes. This guidance is critical because it ensures capital requirements remain reflective of actual firm risks and protects policyholder security by preventing model drift—where internal models diverge from underlying risk realities over time.
What Changed
The supervisory statement introduces several core regulatory expectations:
Internal Model Maintenance Requirement: Firms with approved internal models must maintain the capability to calculate SCR using the standard formula, even if they primarily use internal models for...
Standard Formula SCR Reporting: Firms using approved internal models to calculate solo SCR are expected to report standard formula SCR results privately to the PRA on an annual basis.
Model Drift Monitoring Framework: The PRA uses model drift ratios calculated at model approval and re-based following material changes in risk profile or major model changes to monitor whether...
Submission Format and Timing: Standard formula SCR information must be submitted through XBRL-enabled Excel files or full XBRL format, four weeks following firms' annual quantitative reporting...
Suggested Considerations
*Maintain Dual Calculation Capability: Preserve the technical ability to calculate SCR using the standard formula, regardless of internal model approval status.
*Establish Annual Reporting Process: Implement procedures to calculate and submit standard formula SCR results annually through XBRL-enabled Excel or full XBRL format via BEEDS portal.
*Integrate into Risk Management: Incorporate standard formula SCR calculations into own risk and solvency assessment (ORSA), risk management, and model validation cycles.
*Obtain Senior Management Approval: Ensure standard formula submissions are reviewed and approved by appropriately authorized senior management before submission.
*Maintain Supporting Documentation: Retain quantitative and qualitative documentation supporting standard formula calculations to demonstrate appropriateness for model drift monitoring purposes.
Key Dates
25 October 2016
- Original SS15/16 publication
31 December 2018
- Document updated (referenced in original guidance)
September 2025
- Most recent update to SS15/16 published, clarifying expectations for firms with material non-life technical provisions
30 September 2026DEADLINE
- Implementation deadline for liquidity reporting rules (related Solvency II development)
Four weeks after annual quantitative reporting submissionDEADLINE
Letter to chief financial officers of selected PRA-regulated deposit-takers which provides thematic feedback from the PRA’s review of written auditor reports received in 2025 covering IFRS 9 expected credit loss accounting (ECL) and accounting for climate risk.
AI Analysis
The PRA's Dear CFO Letter, issued on 30 September 2025 by David Bailey, provides thematic feedback to selected PRA-regulated deposit-takers based on its 2025 review of auditor reports on IFRS 9 expected credit loss (ECL) accounting and climate risk integration. It matters because it highlights persistent supervisory concerns around timely credit risk recognition, model limitations, recovery assumptions, and climate impacts amid economic uncertainty, urging firms to strengthen ECL processes to ensure safety and soundness.
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.
- Auditor reports reviewed by PRA (basis for this feedback)
30 September 2025
- PRA issues Dear CFO Letter with thematic feedback
2026
- Next round of written auditor reporting on firms' progress against areas of focus, including data aggregation and securitisation impacts; firms encouraged to self-assess now
Compliance Impact
Urgency: High – Persistent issues from prior years (e.g., 2024 feedback) indicate elevated model risk in uncertain conditions could lead to PRA scrutiny, auditor findings, or enforcement if unaddressed; 2026 auditor reports will benchmark progress, risking heightened supervision. Matters for prudential stability as ECL underpins capital requirements.
The PRA's CP21/25 proposes deletion of 37 banking regulatory reporting templates—primarily 34 FINREP templates representing approximately one-third of all FINREP collections—as the first phase of its Future Banking Data (FBD) programme. This initiative aims to reduce annual reporting burden by approximately £26 million while maintaining supervisory effectiveness by eliminating duplicative, outdated, or low-value data collections.
What Changed
The PRA proposes the following regulatory deletions:
FINREP Template Deletions:
Permanent deletion of 34 whole FINREP reporting templates (approximately one-third of all FINREP collections)
Consolidation of remaining FINREP requirements within a single section of the PRA Rulebook
Clarification of scoping conditions where current provisions are unclear, duplicative, or inconsistently applied
Alignment of reporting remittance dates for FINREP reporting
Other Template Deletions:
Suggested Considerations
*Cease reporting on the 37 deleted templates effective 31 December 2025
*Update internal systems and processes to remove validation rules and submission workflows for deleted templates
*Revise compliance calendars to reflect aligned FINREP reporting remittance dates
*Review Pillar 3 disclosure obligations to identify any continued requirements based on deleted FINREP templates and assess whether disclosure obligations remain despite template deletion
*Implement rulebook changes reflecting consolidation of FINREP scoping provisions into the PRA Rulebook
Key Dates
September 2025
- CP21/25 consultation paper published
8 December 2025
- PS27/25 (Policy Statement) published, confirming final policy
31 December 2025
- Proposed implementation date to avoid firms submitting 2025 Q4 data for deleted templates
CP20/25 is a PRA consultation paper published on 16 September 2025 that proposes targeted updates to the regulatory framework governing third-country insurance branches operating in the UK. The consultation addresses inconsistencies introduced during the Solvency II review, clarifies supervisory expectations, and increases the subsidiarisation threshold—matters that directly affect the operational and compliance costs of non-UK insurers seeking to maintain branch operations rather than establish subsidiaries in the UK market.
What Changed
The consultation proposes four primary regulatory modifications:
Subsidiarisation Threshold Increase
The PRA proposes raising the FSCS liability threshold above which third-country branches must establish a UK subsidiary from £500 million to £600 million. The PRA attributes this increase to inflation rather than organic growth, aiming to prevent branches from artificially approaching the current threshold and incurring unnecessary subsidiarisation costs.
ORSA Reporting Clarification
Current guidance will be updated to clarify that third-country branches must submit an Own Risk and Self...
Suggested Considerations
*Threshold Assessment: Larger third-country branches must reassess whether their liabilities, forecast for the coming three years, mean they need to become subsidiaries given the proposed increased subsidiarisation threshold.
*Reporting Requirement Review: Branches should review updated guidance on ORSA submissions to ensure they provide the undertaking-level ORSA (rather than branch-specific ORSA) with required high-level summaries of solvency position, capital buffer rationale, and stress testing results.
*Quantitative Metrics Compliance: Given new quantitative metrics replacing previous PRA firm categorisation, branches should review what requirements will apply to them to ensure they do not inadvertently misreport.
*Three-Year Notification Obligation: Branches should establish processes to notify the PRA where it is projected that they may exceed the subsidiarisation threshold within the next three years.
*Asset Holding Verification: Confirm that branch assets are held in respect of branch provisions and that assets backing direct insurance liabilities are available, as required by the new rule.
Key Dates
16 September 2025
- CP20/25 published by the PRA
16 December 2025DEADLINE
- Consultation response deadline
H1 2026
- Statement of Policy (SoP) expected to be published; subsidiarisation threshold update anticipated upon SoP publication
31 December 2026
- Planned implementation date for rulebook changes