On 31 July 2020, the PRA published Consultation Paper 12/20: Capital Requirements Directive V (CP12/20).
In CP12/20 the PRA sets out proposed changes to its rules, supervisory statements (SS) and statements of policy (SoP) in order to implement elements of the Capital Requirements Directive V (CRD V).
CP12/20 covers:
- The PRA’s proposed implementation of changes to Pillar 2 provisions relating to firms’ internal capital assessments, supervisory review of those assessments, and the additional capital requirements and guidance that may be applied (chapter 2).
- The implementation of changes relating to remuneration (chapter 3).
- The implementation of CRD V’s intermediate parent undertaking requirements (chapter 4).
- The implementation of the CRD V’s governance requirements (chapter 5).
- Amendments to third country branch reporting (chapter 6).
The proposals set out in CP12/20 have been designed in the context of the UK’s withdrawal from the European Union and entry into the transition period, during which time the UK remains subject to European law.
The PRA has assessed that the proposals would need to be amended under the EU (Withdrawal) Act 2018 (EUWA 2018). A second version of the proposed rules which includes the relevant amendments under EUWA 2018 is set out in Appendix 2 of CP12/20.
With the exception of draft SS2/17 ‘Remuneration’, the draft SSs and SoPs set out in Appendix 3 of CP12/20 should be read in conjunction with SS1/19 ‘Non-binding PRA materials: The PRA’s approach after the UK’s withdrawal from the EU’. The amendments to SS2/17 are due to apply to firms only after the end of the transition period and reflect the fact that EU law will not be applicable at that point.
The deadline for comments on CP12/20 is 30 September 2020.
The PRA will consult in the autumn of 2020 on draft rules to implement the remaining elements of the CRD V not covered by CP12/20 in particular those requiring legislative change and amendments to the Capital Requirements Regulation that apply from 28 December 2020.
