The PRA has published Discussion Paper 1/14: Ensuring operational continuity in resolution (DP1/14).
In DP1/14 the PRA sets out its preliminary views on the principles that firms’ operational arrangements must satisfy in order to facilitate recovery actions, resolution and post-resolution restructuring.
The proposals in DP1/14 cover operational continuity in resolution for banks, building societies and investment firms regulated by the PRA. The proposals are aimed at ensuring that firms of all sizes make the appropriate changes so that services necessary for the continuity of deposit-taking and other functions critical to the UK economy operate effectively following the failure of a firm.
The concept of operational continuity in DP1/14 focuses on the arrangements that need to be made to ensure continuity of the critical shared services needed to facilitate a firm’s recovery actions, resolution or post-resolution restructuring.
In DP1/14 the PRA notes that any eventual proposals would be applied on a proportionate basis and the extent to which a firm would have to restructure its operational arrangements will depend on:
- the extent to which its failure would impact the UK financial system;
- whether it has critical economic functions;
- the resolution strategies that may be applied to the firm; and
- whether any barriers to executing those potential resolution strategies are identified.
The PRA states that it expects that only those firms that have been asked to submit “Phase Two” information under Supervisory Statement 19/13: Resolution Planning, would need potentially to undertake material actions to ensure that their arrangements satisfy the principles set out in DP1/14.
The deadline for comments on DP1/14 is 6 January 2015.
View Ensuring operational continuity in resolution – DP1/14, 6 October 2014