On 11 April 2024, the Prudential Regulation Authority (PRA) published its Business Plan for 2024/25.

The Business Plan sets out the workplan for each of the PRA’s four strategic priorities to support the delivery of its strategy, together with an overview of the PRA’s budget for 2024/25.  The PRA notes that its strategy reflects its expanded responsibilities under the Financial Services and Markets Act (FSMA) 2023 and the changing world in which it operates.

The PRA’s strategic priorities for 2024/25, are to:

  • Maintain and build on the safety and soundness of the banking and insurance sectors, and ensure continuing resilience.
  • Be at the forefront of identifying new and emerging risks, and developing international policy.
  • Support competitive and dynamic markets, alongside facilitating international competitiveness and growth, in the sectors regulated by the PRA.
  • Run an inclusive, efficient and modern regulator within the central bank.

Maintain and build on the safety and soundness of the banking and insurance sectors and ensure continuing resilience

The PRA highlights its commitment to adopting a risk-based approach (as set out in its Consultation Paper CP27/23), while continuing to be a strong, accountable, responsive, and accessible policymaker, and make rules to meet its regulatory obligations, under the newly expanded regulatory framework introduced by FSMA 2023. This will include continuing to implement agreed international standards and reforms in a way that aims to best serve the UK; for example, the PRA plans to publish in 2024 its final rules on the implementation of the Basel 3.1 standards, and to move further towards finalising and implementing the Strong and Simple prudential framework.

The Business Plan also confirms that the PRA will continue to:

  • Pay particular attention to the business opportunities and threats posed by changes in the economic environment that could pose risks to the UK.
  • Promote a strong risk culture among regulated firms and ensure this is supported by adequate financial and non-financial resources, whilst also maintaining a robust regulatory regime that can respond to the external factors that pose the greatest risk to firms’ safety and soundness.
  • Monitor and assess firms’ ability to manage cyber threats through the ongoing use of threat-led penetration (including through CBEST and STAR-FS).  
  • Engage in collective action to develop a view on sector-wide risks, support the building of firm and sector level resilience, and enhance the sector’s ability to respond to system wide disruption, for example through the Cross-Market Operational Resilience Group and the G7 Cyber Experts Group

Be at the forefront of identifying new and emerging risks, and developing international policy

The PRA states that it has continued to use its horizon scanning programme in order to achieve the following aims:

  • Identify emerging external risks, regulatory arbitrage and potentially dangerous practices.
  • Highlight features of the regulatory regime that are not yet delivering the desired results.
  • Allocate supervisory and policy resources to tackling the highest priority risks in a timely manner.

It confirms that, consistent with its mission, it will continue to contribute to lessons learned internationally, policy/standards evaluation, and, in particular, internationally agreed standards with the aim of promoting the safety and soundness of the firms it regulates. Examples of this work will include continuing to focus on identifying and addressing emerging risks internationally, working closely with the Basel Committee Banking Supervision on its response to consultations launched in 2023, and the Basel Core Principles, as well as outstanding work in support of its 2023/24 work programme and strategic priorities.

Support competitive and dynamic markets, alongside facilitating international competitiveness and growth, in the sectors regulated by the PRA

The Business Plan outlines the PRA’s intention to develop proportionate and efficient prudential requirements, to reduce the burden on firms where appropriate and pursue its secondary objectives. The PRA also emphasises its commitment to playing an active role in international standard setting, given the important role of global rules in safeguarding the UK’s open economy through ensuring safe financial markets. Work discussed includes embedding the PRA’s approach to rule-making following the introduction of FSMA 2023, advancing its new secondary competitiveness and growth objective, moving further towards finalising and implementing the Strong and Simple Framework, considering further changes to the remuneration regime, and implementing changes to the Senior Managers & Certification Regime, amongst others.

Run an inclusive, efficient, and modern regulator within the central bank

The PRA notes its aim to create a level playing field, while recognising and planning for the potential impact of the changes in the environment in which it is operating. In pursuit of this objective, the PRA sets out measures it is taking to strengthen and transform its data related capabilities, including building on its digital regulatory reporting. It also explains its continued action to strengthen its culture and working environment, as well as its plans to build on its research efforts in 2024/25 including improving central coordination and capacity building projects.

PRA Budget 2024/25

The PRA’s provisional budget for 2024/25 is estimated at £353.0 million. This is an increase of £34.0 million on the 2023/24 budget.