FPC definition

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UK prudential regime for banks and designated investment firms—timeline

UK prudential regime for banks and designated investment firms—timeline This timeline shows key developments relating to the UK prudential framework for banks and designated investment firms from January 2024 onwards. For earlier developments, see: Capital Requirements Directive IV (CRD IV) and Capital Requirements Regulation (CRR)—timeline [Archived]. 2025 Date Source Document Description 17 April 2025 PRA Update on modification by consent of the Liquidity Coverage Ratio part of the PRA Rulebook—Third Country Covered Bonds The Prudential Regulation Authority (PRA) has published an update to its modification by consent which allowed certain third country covered bonds under the Liquidity Coverage Ratio (CRR) Part of the PRA Rulebook to be included in Level 2A High Quality Liquid Assets, subject to a cap on the amount recognised. The PRA has withdrawn the modification while it considers requests for clarification and technical comments received since the modification was published on 8 April 2025. Once it has completed this process it will clarify its approach. In the interim period, firms are advised that they do...

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Mortgage Market Review—background and implementation [Archived]

Mortgage Market Review—background and implementation [Archived] This document is archived and no longer maintained. Please note that the contents of this Practice Note reflect the amendments that were made to the Financial Conduct Authority’s (FCA) Mortgage Conduct of Business Rules (MCOB) and other relevant parts of the FCA Handbook as a result of the implementation of the mortgage market review (MMR). This note does not reflect subsequent amendments to FCA requirements affecting mortgage lenders and intermediaries, such as changes made as a result of the implementation of the Mortgage Credit Directive (Directive 2014/17/EU) (MCD). Financial Services has updated content on the MCD which can be found in the following content: Authorisation requirements for CBTL mortgages—flowchart. This note and related notes on aspects of the MMR regime have been retained for reference purposes but state the law as at 26 April 2014. It is no longer maintained. As a result of the economic crisis which began in 2007, the Financial Conduct authority (FCA) (and its predecessor, the...

Climate scenario analysis, stress testing and capital requirements in the UK

Climate scenario analysis, stress testing and capital requirements in the UK This Practice Note provides an introduction to the Bank of England (BoE)’s Climate Biennial Exploratory Scenario (CBES) exercise, launched in June 2021, examining the CBES’s structure, purpose, the scenarios covered and the areas of focus. It also considers the Prudential Regulation Authority (PRA)’s Climate Change Adaptation Report 2021, published in October 2021, BOE’s report on climate-related risks and the regulatory capital frameworks, published in March 2023. Background and introduction The BoE has noted that the financial risks posed by climate change are unprecedented, so building a toolkit to help manage and mitigate them is equally unprecedented. Climate scenario analysis and stress testing is a key part of such a toolkit, allowing for the exploration of impacts and exposures at the level of the financial system under a range of different potential climate pathways. For these reasons, the BoE decided to use its stress testing framework to assess the impact of climate-related risks on the UK financial...

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Exploring the FPC’s macro-prudential powers in the buy-to-let mortgage market

Financial Services analysis: The Financial Policy Committee (FPC) published its formal response document following a consultation on powers of direction in the buy-to-let mortgage market at the end of November 2016. Katy Ruddell, managing associate, and Rebecca Price, trainee solicitor, both at Farrer & Co LLP, assess the proposals and suggest that once the FPC imposes an initial restriction, subsequent changes may require the lender to revise their lending thresholds on short notice.

Finding the golden ratio for loan to income mortgages

Financial Services analysis: Will restricting the number of high loan to income (LTI) mortgages help stabilise the economy and the financial system? Richard Waller, head of financial services at TLT, comments on the recommendations made by the Financial Policy Committee (FPC).