On 31 January 2024, the Prudential Regulation Authority (PRA) published Consultation Paper CP3/24 setting out its proposal for a new statement of policy (SoP) that will outline the PRA’s approach to the granting of rule permissions made under Section 138BA of the Financial Services and Markets Act (FSMA) 2023.

The PRA’s aim in setting out its proposed approach in a SoP is to help improve clarity and transparency over the criteria the PRA will use to assess applications under s138BA of FSMA. This has an overarching objective of lowering costs and increasing the speed of s138BA rule permissions.

The proposed SoP has three key messages:

  • That criteria or factors which the PRA expects to consider when assessing specific rule permissions under s138BA of FSMA will generally be communicated in subject specific SoPs the PRA may publish.
  • That when assessing applications made under s138BA of FSMA for rule permissions where approval criteria have not been set out in subject specific SoPs, the PRA expects to consider and place significant weight on the statutory criteria that apply to the PRA’s power under s138A of FSMA.
  • That for applications under both s138BA and s138A of FSMA for rule permission and waivers, the PRA will expect applications to be accompanied by detailed information and evidence demonstrating how the relevant criteria are met. 

Where the PRA has not set out criteria for a rule permission, it encourages firms that wish to apply for the modification or waiver of a rule to apply under the PRA’s general modification and waiver power in s138A of FSMA.

Next steps

The consultation closes on 30 April 2024 and the PRA proposes to publish a final SoP in June 2024.