On 8 December 2023, the PRA published Consultation Paper 27/23: The Prudential Regulation Authority’s approach to policy (CP27/23).

The proposals in CP27/23 build on PRA Discussion Paper 4/22: The Prudential Regulation Authority’s future approach to policy and are relevant to all PRA-regulated firms. The PRA’s approach to policy is evolving because it is taking on wider rule-making responsibilities and enhanced accountability requirements. This is a result of reforms to the UK regulatory framework introduced through the Financial Services and Markets Act 2023.

The draft Approach to Policy document (Approach Document) on which the PRA is consulting is available in Appendix 1 of CP27/23. The Approach Document:

  • Summarises the PRA’s framework of objectives and regulatory principles.
  • Describes how the PRA approaches its primary and secondary objectives, and takes into account its regulatory principles, along with the interactions between them.
  • Describes why and how the PRA engages internationally to pursue its objectives, including through the development and implementation of international standards. It discusses how the integration of the global financial system benefits the UK financial system while also creating risks and sets out how the PRA responds to these risks. It also describes how the PRA takes an outcome-based approach to advising HM Treasury on ‘equivalence’ determinations.
  • Describes the PRA’s approach to creating and maintaining its prudential policy framework, which it refers to as the ‘policy cycle’. It explains that the policy cycle consists of four phases: initiation, development, implementation, and evaluation; and it explains the approach taken to each phase.
  • Describes the PRA’s approach to the Rulebook. It outlines the principles that guide its approach to the Rulebook, with a view making it as accessible, efficient, usable and clear as possible.

The PRA has also published, in Appendix 2 to CP27/23, a list of metrics relating to its secondary competitiveness and growth objective. The purpose of these metrics is to track progress and support scrutiny of its work to embed and advance the objective. The PRA is not consulting on these metrics.

The deadline for responding to CP27/23 is 8 April 2024.