On 28 October 2025, the Prudential Regulation Authority (PRA) published Policy Statement 18/25 ‘Retiring the refined methodology to Pillar 2A (near–final)’ (PS18/25).
PS18/25 provides feedback to responses the PRA received to the following chapters of consultation paper (CP) 9/24 – Streamlining the Pillar 2A capital framework and the capital communications process:
- Chapter 2 – Retiring the refined methodology to Pillar 2A.
- Chapter 4 – Interest rate risk in the banking book (IRRBB) and pension obligation risk Pillar 2A approaches – minor clarifications.
PS18/25 also provides feedback to responses the PRA received in CP7/24 – The Strong and Simple Framework: The simplified capital regime for Small Domestic Deposit Takers regarding the retirement of the refined methodology.
The appendices to PS18/25 contain the PRA’s near-final policy materials with respect to retiring the refined methodology, and final policy materials related to IRRBB and pension obligation risk Pillar 2A approaches:
- Final amendments to Statement of Policy 5/15 – The PRA’s methodologies for setting Pillar 2 capital.
- Final amendments to Supervisory Statement (SS) 31/15 – The Internal Capital Adequacy Assessment Process and the Supervisory Review and Evaluation Process.
- Near-final amendments to SS 31/15.
The PRA intends to publish the final policy materials with respect to retiring the refined methodology in Q1 2026, alongside, or shortly after, it publishes its final policy statement covering the entire Basel 3.1 package. The PRA does not intend to change the policy or make substantive alterations to the policy material before the making of the final policy material.