On 20 January 2025, the Prudential Regulation Authority (PRA) published its response to a letter from the Prime Minister (sent in December 2024) regarding the Government’s approach to regulation in the UK.
The PRA begins by highlighting its support for the Government’s focus on delivering a higher rate of sustainable economic growth in the UK, and on encouraging responsible risk-taking in support of that goal. It explains that all of its objectives – both primary and secondary objectives – are designed to support economic growth. However, as the Prime Minister’s letter related more to the secondary objectives, and in particular to its new secondary objective to facilitate the competitiveness and growth of the UK economy, the PRA’s response focuses mainly on that aspect of its work.
The response looks first at actions the PRA has taken recently to advance competitiveness and growth, including:
- The implementation of the Basel 3.1 updates to banking regulation, which is in progress.
- The now-completed implementation of the new Solvency UK prudential regime for insurers.
- Removing the ‘bonus cap’ for banks.
- Reviewing the Senior Managers and Certification Regime.
- Driving improvements in operational efficiency, with a particular focus on the timely handling of authorisation applications.
The PRA then sets out further actions that it intends to take, including:
- Simplifying the prudential regime for small banks.
- Increasing the ability of the insurance sector to invest in the UK economy.
- Improving the UK framework for Insurance Special Purpose Vehicles (ISPVs), including simplifying and accelerating the ISPV authorisation process.
- Making further amendments to remuneration requirements to enhance competitiveness.
- Simplifying regulatory data reporting from banks.
Finally, the response lists the following areas that it would like to discuss with the Government to see whether they are worth pursuing further:
- ‘Concierge service’ for new inbound foreign firms.
- Rationalising the UK financial services regulators’ ‘have regards’.
- Looking for potential overlaps between the PRA’s governance and disclosure requirements and those of legislation or other relevant regulators.