PRA updates approach documents: PRA has published updates to its "approach" documents for banking and insurance supervision. (Source: PRA Banking Approach June 2014 and PRA Insurance Approach June 2014)

PRA publishes final rules: PRA has updated its rulebook with several final instruments, many of which are backed up with supervisory statements. The new rules are:

  • the Fundamental Rules Instrument: this took effect on 19 June. PRA responded to respondents' concerns that these conflicted at times with FCA's Principles by making changes to bring them into alignment with FCA's Principles wherever possible. However, it says the Fundamental Rules need to be different to reflect PRA's different objectives and also the recommendations of the PCBS. There are eight Fundamental Rules, including those on effective risk management systems and preparation for resolutions;
  • the Information Gathering Instrument: this also took effect on 19 June and sets out a firm's obligations to co-operate with and otherwise provide information to PRA and give access to documents and personnel in support of PRA's regulatory powers as well as helping overseas regulators;
  • the Auditors Instrument: this also took effect on 19 June and deals with the qualifications and appointment of auditors and firms' duties in relation to them;
  • the Lloyd's (Actuaries and Auditors) Instrument: this also took effect on 19 June and comprises PRA's Direction in respect of actuaries and auditors under Part XXII of the Financial Services and Markets Act 2000;
  • the Permissions and Waivers Instrument: this also took effect on 19 June and sets out how firms should apply to PRA for variations and cancellations or permissions and waivers, and also addresses modifications to rules and communication of information to PRA; 
  • the Use of Skilled Persons Instrument; this also applied from 19 June and sets out information on the appointment of Skilled Persons, and the cost, content and delivery of their report. Following responses to consultation, PRA has amended its rules and its supervisory statement. Respondents were concerned at the increasing use and cost of skilled persons reports; and
  • the Notifications Instrument: this also took effect from 19 June and sets out all the notification requirements to PRA and annexes the relevant forms. 

(Source: PRA Makes New Rules)

PRA publishes culture policy: PRA has published its statement of policy on how it uses its powers to address serious failings in firms' culture. It looks at PRA's role and the recommendations of the PCBS. It also reiterates that the policy places no new requirements on firms and explains how PRA's supervisory technique focuses on ongoing compliance with the threshold conditions. It stresses how PRA expects a firm to have a culture that supports its prudent management. The statement gives examples of where PRA may find failings and outlines its options for supervisory action where it has a concern. (Source: PRA Culture Failings Statement)

PRA summarises passporting arrangements: PRA has summarised the application of its rules to an incoming EEA firm that is a PRA authorised person. (Source: PRA Summarises Passporting Arrangements)

PRA announces policy on the financial stability information power: PRA has published a statement of policy on how it will exercise its powers to require firms to provide documents relevant to UK financial stability. Normally PRA will give written notice and allow the firm to make representations but, where necessary, it may impose an information requirement without prior notice. (Source: The Financial Stability Information Power)

PRA and DFSA sign MoU: PRA and the Dubai Financial Services Authority (DFSA) have signed a Memorandum of Understanding (MoU) on supervisory cooperation. The MoU contains an Appendix setting out procedures for enforcement measures. (Source: MoU Between PRA and DFSA)

PRA updates on Solvency 2 implementation: PRA has written to directors of insurance companies with an overview of the planning process for the entry into force of Solvency 2 on 1 January 2016. The letter includes a timetable of activity for the coming months. PRA is concerned that development of internal models may not be completed by the time the period for applying for their approval opens on 1 April 2015. It encourages firms to meet their supervisory representatives to agree joint plans and discuss a date for formal application. The letter links to PRA's supervisory statement on the calculation of technical provisions and use of internal models for general insurers, and to the materials of the technical conferences PRA has held recently. It also reminds firms of the requirements under the supervisory statement on meeting the guidelines of the European Insurance and Occupational Pensions Authority: firms must focus particularly on those requirements in Solvency 2 that are new, such as the Prudent Person Principle, and should remember to send their Own Risk and Solvency Assessment (ORSA) before the end of the year. Finally, the letter announces that PRA intends to consult shortly on changes to the PRA Handbook. PRA has also sent two other letters to firms in relation to matching adjustment. (Source: News on Solvency 2)