On 20 January 2026, the Prudential Regulation Authority (PRA) published Policy Statement 1/26 – Implementation of Basel 3.1: Final rules (PS1/26).

Basel 3.1

The final policy, rules and supervisory expectations in PS1/26 were published as near-final in Policy Statement 17/23 – Implementation of the Basel 3.1 standards near-final part 1 (PS17/23), Policy Statement 9/24 – Implementation of the Basel 3.1 standards near-final part 2 (PS9/24) and Policy Statement 7/25 – Update to Policy Statement 9/24 on the SME and infrastructure lending adjustments (PS7/25).

The PRA has not made substantive changes to the near-final policy and rules in PS17/23, PS9/24 and PS7/25. The PRA has, however, made minor amendments, corrections and clarifications to the policy, rules, and supervisory statements published as near-final. These amendments are set out in chapter 2 of PS1/26. The PRA considers that the changes set out in chapter 2 will assist firms by providing further clarity and improving readability as compared to the near-final policy and rules set out in PS17/23 and PS9/24.

The Basel 3.1 policy, rules, supervisory statements, and statements of policy will take effect on 1 January 2027.

Market risk

The PRA also provides feedback and final rules on its targeted amendments to the near-final Basel 3.1 market risk framework that were covered in Consultation Paper 17/25 – Basel 3.1: Adjustments to the market risk framework (CP27/25).

In CP27/25 the PRA proposed to delay implementation of the Fundamental Review of the Trading Book internal model approach (FRTB-IMA) by one year to 1 January 2028. In the interim period from 1 January 2027, firms would retain existing IMA model permissions.

Having considered the responses to CP27/25 the PRA has decided to implement the proposed FRTB-IMA delay as set out in CP17/25. However, to address firms’ concerns on the challenges to implement the proposal, the PRA is clarifying that during the interim period:

  • Firms can continue to include trading book positions in their internal models in accordance with their existing IMA permission, where those trading book positions would otherwise be ineligible under FRTB-IMA (for example securitisation positions).
  • For specific risks relating to securitisation and credit derivative positions and correlation trading portfolio as set out in Article 364(2) and (3) of Part A of Annex 3 of the Internal Model Approach (IMA) Part, firms can continue to capitalise these risks through the existing standardised approach where the firms do not have IMA permission for these specific risks.
  • Firms can continue to capitalise their interest rate internal hedge positions in the same portfolio with other trading book positions under their existing IMA permission, where those interest rate internal hedge positions would otherwise need to be capitalised separately under FRTB-IMA.
  • Where firms’ existing IMA permission leads to double-counting of risk as a result of the FRTB-IMA delay, firms should raise this with their respective supervisors.

UK CRR

The PRA has published Policy Statement 3/26 – Restatement of CRR requirements – 2027 implementation – final (PS3/26). In PS3/26 the PRA provides the final policy to restate the remaining relevant provisions in the UK Capital Requirements Regulation (UK CRR) within the PRA Rulebook and other policy material, and amendments to the PRA’s policy regarding External Credit Assessment Institution mapping. These were published as near-final in Policy Statement 19/25 – Restatement of CRR requirements – 2027 implementation – near-final (PS19/25).

The PRA considers that there is no substantive difference between the near-final rules in PS19/25 and the final rules and policy in PS3/26. Minor amendments have been made to the rules published as near-final, and to certain policy materials, to reflect the finalisation of the Basel 3.1 rules and policies in PS1/26. The PRA has also made minor non-consequential changes that do not affect the substance of the policy.

The PRA also notes that the UK CRR definitions of ‘probability of default’, ‘loss given default’ and ‘conversion factor’ have been revoked by The Financial Services and Markets Act 2023 (Commencement No. 12 and Saving Provisions) Regulations 2026 and replaced by definitions in the PRA Rulebook Glossary. The PRA has italicised these terms throughout the final rule instrument set out in Appendix 1 to PS3/26 where the Glossary definitions are to be applied and left these terms unitalicised where the Glossary definitions are not relevant. The PRA considers that these changes are necessary for the final rules to be coherent and to have their intended effect.

The PRA notes that HM Treasury has made the commencement regulations that revoke the relevant provisions of the UK CRR. Those provisions will be replaced by the rules and the policy materials in PS3/26. The policies on the remainder UK CRR will take effect on 1 January 2027.

Retiring the refined methodology to Pillar 2A

The PRA has published Policy Statement 2/26 – Retiring the refined methodology to Pillar 2A – final (PS2/26).

Previously, the PRA published Policy Statement 18/25 – Retiring the refined methodology to Pillar 2A – near-final (PS18/25). In PS18/25 the PRA set out its near-final policy to retire the ‘refined methodology’ in Pillar 2A when firms implement the Basel 3.1 credit risk standards. In PS2/26 the PRA sets out its final policy set out in amendments to Supervisory Statement (SS) 31/15 – The Internal Capital Adequacy Assessment Process (ICAAP) and the Supervisory Review and Evaluation Process (SREP).

In PS2/26 the PRA reports that there have been no changes between the near-final policy and the final policy. In PS18/25, the PRA has made a minor adjustment to the draft policy material, specifically to paragraph 5.12A, in the near-final SS31/15. This change relates to the implementation of retiring the refined methodology for small domestic deposit takers, as the Interim Capital Regime (ICR) is no longer required. This change is explained in greater detail in paragraphs 1.27-1.28 of PS18/25. This amendment is also reflected in the final policy.

The policy to retire the refined methodology to Pillar 2A for all firms will take effect from 1 January 2027.

Other consultations

The rule instruments, supervisory statements and statements of policy in the appendices to PS1/26 also reflect the PRA’s feedback to two other related consultations: