On 30 April 2021, the PRA published a letter it had sent to all Chief Risk Officers of PRA-regulated UK deposit takers.

The letter provides a summary of the PRA’s findings following a review that asked the Internal Audit (IA) function of a sample of non-systemic banks and building societies to undertake a review of the Collections function to provide assurance to their boards and to the PRA over the effectiveness of controls in three specific areas: collection processes and control environment, governance and oversight, and regulatory reporting.

As set out in the letter the PRA’s main findings are that the processes and controls in place for collection operations, from a prudential perspective, are largely adequate and effective across the majority of firms sampled. However, some firms need to continue to enhance their collections operations, develop the right level of control and governance to ensure its effectiveness, review the adequacy of resources, efficiently manage the processes and ensure adequate oversight at board level.

The PRA is aware that collection controls and processes are under review for many firms, in particular in light of the increase in collections activity due to the COVID-19 pandemic. The PRA will continue to monitor firms’ Collections functions in light of the COVID-19 pandemic impact on arrears and forbearance levels.