On 15 December 2021, the PRA published Feedback Statement 1/21: Responses to DP1/21 ‘A strong and simple prudential framework for non-systemic banks and building societies’ (FS1/21).

Earlier this year, the PRA published Discussion Paper 1/21 ‘A strong and simple prudential framework for non-systemic banks and building societies’ (DP1/21). In DP1/21 the PRA set out a vision for a ‘strong and simple’ prudential framework for banks and building societies that it considers are neither systemically important nor internationally active.

In FS1/21 the PRA provides a summary of the responses to DP1/21. The PRA also intends to stimulate further debate with the Feedback Statement by pulling out broad themes from the responses to DP1/21.  Among other things the PRA notes that:

• The majority of respondents were supportive of the long-term vision for a strong and simple prudential framework for non-systemic firms in the UK as presented in DP1/21, i.e. that prudential requirements expand and become more sophisticated as the size and/or complexity of firms increase.
• A majority of respondents also showed some or full support for the idea of achieving the vision by having a strong and simple framework comprised of a number of layered prudential regimes, although some respondents were concerned that many layers would make the prudential framework too complicated.
• There was support for many of the ideas about how the simpler regime could be designed. Respondents with views thought the criteria for determining firms eligible for any simpler regime that were discussed in DP1/21, or a significant subset of them, were appropriate.
• The majority of respondents supported the idea that firms in scope of the simpler regime could choose to operate under the prudential rules for larger firms instead.