The paper, “The Bank of England, Prudential Regulation Authority – Our approach to banking supervision”, sets out the how new authority, the Prudential Regulation Authority, will approach regulation.
FSA chief executive Hector Sants said: “The PRA’s purpose is fundamentally different from that of previous regulatory regimes and will lead to a significantly different model of supervision to that which was in use pre-2007. In designing this new model we have incorporated both the lessons learned from the last financial crisis and those from firm failures of the past.
“The new regulatory model will be based on forward looking judgements and will be underpinned by the fact that the PRA has a single objective to promote the stability of the UK financial system and in consequence will be a very focused organisation. The new supervisory approach will build on the more intensive approach adopted by the FSA since the crisis.”
The paper will be presented and discussed at a conference in London today for CEOs and senior managers of firms that will come under the PRA’s supervisory control.
Today’s paper outlines:
- the principles underlying the PRA’s approach;
- the scope of the PRA;
- the PRA’s risk assessment framework
- the PRA’s forward looking, judgement-led approach to supervision;
- the approach to policy-making that will support the judgement-led model; and
- the approach to authorising firms and approving individuals.
The PRA will be responsible for supervising both insurance companies and deposit-takers. A companion paper will be published in June 2011 to cover the PRA’s approach to supervising insurance companies.
