On 8 September 2022, the PRA published Discussion Paper 4/22 ‘The PRA’s approach to policy’ (DP4/22).
In DP4/22 the PRA publishes for discussion its proposals as to how it will operate following the implementation of the reforms set out in the Financial Services Bill (the Bill). However, in DP4/22 the PRA does not cover the ‘intervention power’, which the government has since stated it intends to introduce through the parliamentary process as an amendment to the Bill.
The Bill does not make any changes to the PRA’s primary objectives but does introduce an additional secondary objective to facilitate, subject to alignment with international standards, the international competitiveness of the UK economy and its growth in the medium to long-term. The PRA will look at ways in which it can facilitate competitiveness and growth, taking advantage of the additional opportunities that it has been given under the Bill to review areas of policy that have previously been fixed in UK legislation. That includes: providing firms with predictability over potential changes; being open to international firms and business; considering the market impact of its proposals on UK competitiveness and growth relative to approaches taken in other jurisdictions; and making its regulatory framework more accessible and user-friendly.
As it takes on wider responsibilities, the PRA recognises the importance of appropriate accountability. It will continue to engage with HM Treasury, and enhance its engagement in certain areas in response to reforms introduced in the Bill, such as HM Treasury’s power to require regulators to review their rules.
The PRA is also aware that the broader changes being implemented through the Bill will allow it to be more flexible in its response to risk and it will be able to choose from a range of responses when it decides to act, from policy to supervision. The PRA wants to increase the amount of engagement with stakeholders through the policy-making cycle, and it also wants to engage a broader range of stakeholders. At the same time, the PRA also has a programme of work to review regulatory reporting. It has already streamlined reporting requirements in insurance, will full reviews of data collection to follow in both insurance and banking.
The deadline for comments on DP4/22 is 8 December 2022.