On 3 July 2025, the Prudential Regulation Authority (PRA) published Policy Statement 8/25 – Updates to the UK policy framework for capital buffers (PS8/25).

Background

In September 2024, the PRA and HM Treasury published their consultations on amendments to the UK framework on capital buffers. These amendments would result in some regulatory material on the UK capital buffers framework being removed from the statute book and replaced by PRA policy material. In addition, the PRA proposed to streamline some of its policy materials on capital buffers as part of this process, to enhance usability and clarity. The PRA’s proposals were set out in Consultation Paper 10/24 (CP10/24). The deadline for comments on CP10/24 was 12 December 2024.

Statutory instrument

There was made on 4 June 2025, The Capital Buffers and Macro-prudential Measures Regulations 2025 (the 2025 Regulations).

The Capital Requirements (Capital Buffers and Macro-prudential Measures) Regulations 2014 are revoked by virtue of the Financial Services and Markets Act 2023 (Commencement No 9) Regulations 2025 and are partly restated by the 2025 Regulations with technical modifications to improve the effectiveness of the overall capital buffer framework.

This approach removes two capital buffers from legislation (the Capital Conservation buffer (CCoB) and Globally Systemically Important Institutions (G-SII) buffer) and responsibility for setting these buffers is transferred to the PRA. Other regulations are restated, with some technical modifications, where they relate to capital buffers that are set by the Bank of England’s Financial Policy Committee (the Countercyclical Capital Buffer and the Other Systemically Important Institutions (O-SII) buffer).

The revocation and restatement take effect on 31 July 2025.

Final policy

In PS8/25 the PRA sets out its final policy in relation to amendments being made to the UK framework on capital buffers. The PRA reports that it received one response to CP10/24, which supported its proposals, and so the analysis, as set out in CP10/24, remains unchanged.

The finalised policy is set out in the following appendices:

  • Statement of Policy (SoP) – the PRA’s approach to identifying G-SIIs and setting G-SII buffers (Appendix 1).
  • Amendments to SoP – The PRA’s approach to identifying O-SIIs (Appendix 2).
  • Amendments to SoP – The PRA’s approach to the implementation of the O-SII buffer (Appendix 3).
  • Reporting instructions for the purpose of identifying and assigning G-SII buffer rates (Appendix 4).
  • PRA Standards Instrument: The Technical Standards (specification of the methodology for the identification of Globally Systemically Important Institutions) Instrument 2025 (Appendix 5).
  • PRA Rulebook Capital Requirements Regulation (CRR) firms: capital buffers (consequential amendments) instrument 2025 (Appendix 6).

Next Steps

As mentioned above the updated capital buffer framework comes into effect on 31 July 2025. The policy material set out in PS8/25 comes into effect on the same date.