Prudential Regulation Authority (United Kingdom)

Role

The PRA's role is defined in terms of two statutory objectives: to promote the safety and soundness of the firms it regulates and, specifically for insurers, to contribute to the securing of an appropriate degree of protection for policyholders (section 12 of the PRA Statement of Policy). In promoting safety and soundness, the PRA focuses primarily on the harm that firms can cause to the stability of the UK financial system. A stable financial system is one in which firms continue to provide critical financial services – a precondition for a healthy and successful economy.

It will have close working relationships with other parts of the Bank, including the Financial Policy Committee and the Special Resolution Unit. The PRA's most significant supervisory decisions are taken by the Prudential Regulation Committee – comprising the Governor of the Bank of England, the Deputy Governor for Financial Stability, the Deputy Governor for Monetary Policy, the Deputy Governor for Markets & Banking, the chief executive officer of the PRA (and Deputy Governor for Prudential Regulation) and independent non-executive members.

The PRA's approach to regulation and supervision has three characteristics:

• A judgement-based approach: The PRA will use judgement in determining whether financial firms are safe and sound, whether insurers provide appropriate protection for policyholders and whether firms continue to meet the threshold conditions.
• A forward-looking approach: The PRA will assess firms not just against current risks, but also against those that could plausibly arise in the future. Where the PRA judges it necessary to intervene, it will generally aim to do so at an early stage.
• A focused approach: The PRA will focus on those issues and those firms that pose the greatest risk to the stability of the UK financial system and policyholders.

The PRA approach to supervision will not seek to operate a "zero-failure" regime. Rather, the PRA will seek to ensure that a financial firm which fails does so in a way that avoids significant disruption to the supply of critical financial services.

List of chief executives

The chief executive of the PRA is also the Bank of England Deputy Governor for Prudential Regulation. The following is a list of chief executives since the PRA's inception:

History

From 1 April 2013, the Prudential Regulatory Authority, alongside the Financial Conduct Authority, replaced the Financial Services Authority.

In response to the onset of the COVID-19 pandemic in the United Kingdom in March 2020, the PRA sent a formal request to the seven largest British lenders to suspend dividends and share repurchases until the end of the year.

References

References

1. (2016). (4 May 2016)
2. "PRUDENTIAL REGULATION AUTHORITY LIMITED". [[Companies House]].
3. "Statement of Policy". Bank of England.
4. (May 2011). "Prudential Regulation Authority – Approach". Bank of England.
5. "Prudential Regulation Committee".
6. "Prudential Regulation Authority – About". Bank of England.
7. Haill, Oliver. (8 May 2013). "Why the FSA was split into two bodies". [[Financial Times.
8. Morris, Stephen. (1 April 2020). "British lenders suspend dividends after BoE pressure". [[Financial Times]].
9. Jones, Huw. (10 December 2020). "Bank of England relaxes coronavirus curbs on bank dividends and bonuses". [[Reuters]].
10. Vina, Gonzalo. (April 2023). "U.K. Scraps FSA in Biggest Bank Regulation Overhaul Since 1997". Bloomberg.
11. (17 June 2010). "Reform and regulation". HM Treasury.
12. "News Release – Prudential Regulation Authority: the future approach to banking supervision". Bank of England.
13. (8 November 2011). "The Prudential Regulation Authority: what it does and who is in charge". The Telegraph.
14. Jenkins, Patrick. (11 April 2012). "Prudential Regulatory Authority selects HQ". [[Financial Times]].
15. (16 June 2010). "Q&A: Bank given clear responsibility for financial stability". [[Financial Times]].
16. (11 March 2015). "Two years on from the March 2013 publication of A review of requirements for firms entering into or expanding in the banking sector". Bank of England.