On October 15, the Bank of England and the FSA published a joint paper on how the UK’s new prudential regulator for deposit takers and investment firms, the Prudential Regulation Authority (the PRA), will operate, entitled "The PRA’s approach to banking supervision." The paper is designed to provide an overall description of the PRA and the approach it will take in relation to:
- its objective to promote the safety and soundness of firms primarily by seeking to avoid adverse effects on financial stability (the PRA acknowledges that, while firm failures will happen, it will seek to ensure that they are orderly);
- the new statutory threshold requirements for firms to be permitted to carry on regulated activities;
- judgement based and forward looking supervision; and
- working closely with both the FCA and the Financial Policy Committee, which will be able to make recommendations and give directions to the PRA.
The paper was accompanied by a speech by Andrew Bailey, Managing Director, Prudential Business Unit of the FSA, entitled "The future of banking regulation in the UK."