PRA confirms fees and levies: PRA has finalised its rules on its fees and levies. Its policy statement in response to its consultation highlights:

  • its final Annual Funding Requirement (AFR) and Special Project Fees for Solvency II for 2014/15;
  • allocation of the AFR to fee blocks and final tariff rates for 2014/15; and
  • the refund of the underspend for 2013/14.

The final rules are consistent with the consultation version, except for an adjustment to take account of the underspend. (Source: PRA Confirms Fees and Levies)

PRA consults on changes to capital rules: PRA is consulting on several clarifications to its rules and supervisory statements implementing EU bank capital rules into the UK. The clarifications concern:

  • applications to use the Financial Collateral Comprehensive Method;
  • non-availability of the advanced internal ratings-based approach in relation to exposures to central governments, public sector entities, central banks and financial sector entities;
  • the 50% risk weight to certain commercial real estate exposures in non-EEA countries;
  • how the limits on directorships affect individuals who manage the consolidated group from the unregulated holding company; and
  • reporting risks not in VaR.

(Source: Updates to Credit Risk Mitigation, Credit Risk, Governance and Market Risk)

PRA speaks on annuities and matching adjustment: Andrew Bulley, Director of Life Insurance at PRA, has addressed the All Party Parliamentary Group on Insurance and Financial Services at the Houses of Parliament. He first discussed the impact of the 2014 Budget announcements on the annuity market. As far as PRA regulatory objectives are concerned, PRA will be attentive to issues arising from changes to business models and increased competition and innovation. He then commented on the matching adjustment under Solvency 2, which provides for reduced capital requirements where insurers closely match the liquidity and duration profiles of assets and liabilities. He said that the matching adjustment is not designed to favour particular assets classes, such as infrastructure. He also noted that Solvency 2 introduces a neutral approach to asset allocation, which will just be subject to the prudent person principle. (Source: Andrew Bulley Speech)