UK Prudential Regulator Publishes 2020/2021 Business Plan
04/09/2020The U.K. Prudential Regulation Authority has published its Business Plan for 2020/2021, which sets out its strategic goals for the next 12 months and its work plan to deliver them. The PRA has had to tailor its intended Business Plan to take account of the impact of the COVID-19 pandemic. In particular, it has elected to cancel its 2020 annual cyclical scenario stress tests, delay the publication of the results of the 2019 biennial exploratory scenario, postpone less critical aspects of its supervisory program for individual firms and extend consultation periods and implementation timeframes for new initiatives where possible.
In summary, the new 2020/2021 goals and work plan focus on:
- Ensuring robust prudential standards and supervision of regulated firms: in light of the U.K.’s withdrawal from the EU on January 31, 2020, the PRA is focused on ensuring the U.K.’s regulatory regime is effective and robust. It intends to prioritize key risks and highrisk firms, authorize a high number of thirdcountry branch applications in preparation for the end of the Brexit implementation period and support the transition away from LIBOR.
- EU withdrawal: the PRA will continue to develop the U.K.’s regulatory framework in preparation for the end of the Brexit implementation period and to work on equivalence assessments of the U.K. regulations with the EU and third countries.
- Adapting to market changes and horizon scanning: issues that are expected to be of particular relevance over the coming year are the risks that climate change poses to the economy and financial system, FinTech and digital currencies and artificial intelligence and machine learning.
- Guaranteeing regulated firms’ financial resilience: the PRA plans to assess firms’ capital adequacy and liquidity resources through reviews of firms’ internal models, liquidity and capital, as well as through scrutiny of regulatory returns. The PRA also intends to implement its policy on credit unions’ capital requirements in 2020 and to clarify its approach to setting the PRA buffer for new banks, following its 2019 consultation on updates to the Pillar 2 capital framework.
- Operational resilience: the PRA has extended the deadline for submitting feedback on its 2019 consultation on impact tolerances for important business services to October 1, 2020. Once responses have been received, the PRA intends to use that feedback to inform its impact tolerances policy for 2020/2021.
- Recovery and resolution: the PRA intends to ensure firms are accountable for their resolvability by implementing the new Resolvability Assessment Framework, which requires U.K. banks and building societies with at least £50bn in retail deposits to submit reports of their resolvability assessments to the PRA and to publically disclose a summary of that report in a two-year cycle.
The U.K. Financial Conduct Authority has also separately published its Business Plan for 2020/2021.
View the PRA's 2020/2021 Business Plan.
View details of the PRA's consultation on operational resilience.
View details of the PRA's Policy Statement on Pillar 2 requirements.
View details of the PRA's Resolvability Assessment Framework.
View details of the FCA’s 2020/2021 Business Plan.
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