The Prudential Regulation Authority (PRA) published Statement of Policy 3/25 setting out how it will assess applications from PRA-authorised persons to disapply PRA rules or apply them with modifications under section 138BA of the Financial Services and Markets Act 2000, focusing on the Own Funds (CRR) Part of the PRA Rulebook. The statement applies to banks, building societies, PRA-designated investment firms and PRA-approved or PRA-designated financial or mixed financial holding companies, and excludes credit unions and third-country branches. The PRA confirms its permission power is discretionary and will weigh whether unmodified compliance would be unduly burdensome or would not achieve the rules’ purpose, and whether granting the direction would not adversely affect the PRA’s objectives, alongside considering whether a permission could undermine the purposes for which the relevant rule was made. It also sets out specific decision factors for permissions tied to Own Funds (CRR) provisions, including criteria for classifying Common Equity Tier 1 instruments, reducing deductions for defined benefit pension fund assets, allowing non-cash distributions on instruments, using conservative estimates for index holdings exposures, and granting permissions for reductions or repurchases of own funds and eligible liabilities, including time-limited general prior permissions of up to one year subject to quantitative caps. The policy takes effect from 1 January 2026. Firms may withdraw an application at any time before the PRA reaches a decision, and once a permission is granted the PRA expects prompt notification of any failure or expected failure to meet ongoing conditions or any other material change in circumstances that could affect its assessment.

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