PRA consults on external auditors: PRA is consulting on a rule that would require external auditors of large UK banks to provide written reports to PRA as part of the statutory audit. Treasury is already consulting on starting PRA's disciplinary powers over actuaries and external auditors, while PRA is consulting on how it will use those powers. Now PRA wants external auditors should provide PRA with written reports annually. Initially at least, the requirement will apply only to the largest UK headquartered banks. The consultation plans to introduce the requirement in relation to the audits of financial reporting periods that end on or after 1 November 2016. Consultation closes on 27 May. (Source: PRA Consults on External Auditors)
PRA updates on CRD4: PRA has updated its CRD4 tracker to state that in accordance with Article 131 of CRD4 the PRA disclosed the 2014 list of UK headquartered Global Systemically Important Institutions and their respective subcategories. The UK institutions are:
- Royal Bank of Scotland; and
- Standard Chartered.
The tracker has also been updated to reflect that, on 13 February, PRA confirmed that an administrative fee of £250 will be levied to firms that are late reporting a regulatory return. (Source: CRD4 Updates)
PRA writes to Remuneration Committee on CRD4: Andrew Bailey has written to the Chair of the Remuneration Committee highlighting areas of uncertainty arising from the coming into force of the CRD4 remuneration requirements. In his letter he specifically addressed:
- the identification of Material Risk Takers;
- guaranteed variable remuneration;
- determining the fixed component of total remuneration for the ratio; and
- clawback obligations.
Once EBA's revised guidelines (see above) are finalised, PRA intends to issue a supervisory statement to clarify key areas of uncertainty that have arisen in relation to the changes brought in under the remuneration provisions of CRD4. The position of PRA in relation to the areas covered in the letter may be reviewed in light of the final revised EBA guidelines. (Source: Letter From PRA's Deputy Governor to Remuneration Committee Chair)
PRA speaks on future challenges: Paul Fisher, Deputy Head of PRA and Executive Director of Insurance Supervision, has given a speech titled "confronting the challenges of tomorrow’s world", focusing on the insurance industry, at the Economist’s Insurance Summit 2015. His speech addressed:
- the future impacts of societal and environmental change, such as climate change, the increasing digitisation of daily life and cyber crime;
- the unpredictability of many aspects of the financial world, citing interest rates as an example; and
- insurance innovation and regulation, including the refreshing of product offerings, altering operational structures and enhancing distribution channels.
He also spoke at length about the various impacts that Solvency 2 might have on the insurance industry including introducing greater risk-sensitivity, co-operation across jurisdictions, and consistency in approach. (Source: Confronting the Challenges of Tomorrow’s World)
PRA updates on credit unions: PRA has updated its website to give guidance to credit unions on how to deal with dormant accounts. (Source: PRA Updates on Credit Unions)