HM Treasury published the Chancellor of the Exchequer’s statutory recommendations to the Bank of England’s Prudential Regulation Committee (PRC) on the aspects of government economic policy the Prudential Regulation Authority (PRA) should have regard to when advancing its objectives. The recommendations emphasise embedding the PRA’s secondary international competitiveness and growth objective across policymaking and supervision, while continuing to prioritise safety and soundness and policyholder protection. The letter asks the PRA to facilitate informed and responsible risk-taking and innovation, support market entry and technology adoption including Artificial Intelligence, improve consumer access to appropriate advice and products, enable UK firms to support the net zero transition, streamline firms’ end-to-end experience with the PRA, and maintain UK leadership in international regulatory fora. It also sets out six areas for the PRC to have regard to, spanning the financial sector’s contribution to growth, a pro-innovation regulatory environment, the UK’s position as a global finance hub, sustainable finance, competitive capital markets, and financial inclusion and home ownership. An accompanying PRC response commits to taking the recommendations into account where relevant and practicable and links them to work already underway and planned, including the Strong and Simple initiative for smaller banks, tailored implementation of Basel 3.1, Solvency UK reforms, a move to biennial main bank stress testing with lighter interim exercises, planned consultations on streamlining SM&CR and regulatory data collection, and further work on remuneration, ring-fencing proportionality, and faster authorisation processes such as for UK insurance special purpose vehicles. The Chancellor’s letter will be laid before Parliament, and the PRC is required to respond within a year of receiving the recommendations and annually thereafter. The PRC signalled further updates through its annual report and business plan and indicated plans to publish its final Policy Approach document in early 2025, alongside forthcoming consultations referenced in the response.
HM Treasury 2025-01-27
HM Treasury issues growth and competitiveness recommendations to the Bank of England’s Prudential Regulation Committee
HM Treasury issued recommendations to the Bank of England’s Prudential Regulation Committee, emphasizing integrating the Prudential Regulation Authority's international competitiveness and growth objective into policymaking while maintaining safety. Recommendations include fostering innovation, supporting market entry, and enhancing consumer access, focusing on sustainable finance and competitive capital markets. The Committee committed to aligning these with ongoing initiatives, including Basel 3.1 implementation and streamlining regulatory processes.