On 15 September 2021, the PRA published Policy Statement 20/21 ‘Financial holding companies: Further implementation’ (PS20/21).
In PS20/21 the PRA provides feedback on Consultation Paper 12/21 ‘Financial holding companies: Further implementation’ (CP12/21) and sets out final rules. It also contains:
- New Statement of Policy ‘Supervisory measures and penalties in relation to financial holding companies’.
- Updated Statement of Policy ‘The Prudential Regulation Authority’s approach to enforcement: statutory statements of policy and procedure’.
In PS20/21 the PRA reports that it received no responses to CP12/21 and is therefore implementing the final rules as consulted on.
In CP12/21 the PRA proposed:
- Rules in respect of the application of existing consolidated prudential requirements to financial holding companies and mixed financial holding companies that have been approved or designated in accordance with Part 12B of the Financial Services and Markets Act 2000 (FSMA) (as amended by The Financial Holding Companies (Approval etc.) and Capital Requirements (Capital Buffers and Macro-prudential Measures) (Amendment) (EU Exit) Regulations 2020).
- Ancillary amendments to the Definition of Capital, Groups, and Notifications Parts of the PRA Rulebook to ensure that, where the application of a consolidated prudential requirement also carries a secondary obligation, that obligation would rest at the appropriate level of application.
- A new Statement of Policy ‘Supervisory measures and penalties in relation to financial holding companies’. The PRA proposed in CP12/21 guidance with respect to directions and penalties over holding companies under Part 12B FSMA, covering the taking of measures, including directions (pursuant to s192T FSMA), the imposition of penalties (s192Y FSMA), and the amount of penalties (s192Y FSMA).
The policy presented in PS20/21 took effect on 15 September 2021.
The amendment to 4.1 of the Groups Part of the PRA Rulebook will come into force on 1 January 2022, along with the other PRA Rules which implement Basel III.