Prudential Regulation Authority—objectives and principles
Produced in partnership with Speechly Bircham
Prudential Regulation Authority—objectives and principles

The following Financial Services practice note produced in partnership with Speechly Bircham provides comprehensive and up to date legal information covering:

  • Prudential Regulation Authority—objectives and principles
  • Scope of PRA regulation
  • General objective of the PRA
  • PRA objectives—insurance objective
  • PRA objectives—specified objective
  • PRA objectives—strategy
  • PRA objectives—secondary competition objective and regulatory principles
  • PRA's judgment-based supervision
  • PRA and FCA memorandum of understanding

Scope of PRA regulation

While Prudential Regulation Authority (PRA)-regulated firms are regulated by the Financial Conduct Authority (FCA) for conduct purposes, the PRA is primarily responsible for their prudential regulation. The institutions that fall within the PRA's scope are the institutions with the most significant potential impact on the stability of the UK economy, including banks, building societies, insurers and certain investment firms.

General objective of the PRA

The PRA has one over-arching objective of 'promoting the safety and soundness of PRA-authorised firms' (ie dual-regulated firms). This objective is found in section 2B of the Financial Services and Markets Act 2000 (FSMA 2000) (as inserted by the Financial Services Act 2012 (FSA 2012, s6)).

This objective is primarily advanced:

  1. through regulation which seeks to ensure that the business of PRA-authorised persons is carried on in a way which avoids any adverse effect on the stability of the UK financial system, for example, it formulates and introduces policies and rules it expects firms to meet on in areas like capital adequacy and liquidity, and

  2. through supervision to seek to minimise the adverse effect that the failure of a PRA-authorised person could be expected to have on the stability of the UK financial system, it conducts supervisory assessments to assess the risk that firms pose to the PRA's objective, and intervenes to reduce them to ensure that the business of PRA-authorised

Related documents:

Popular documents