HM Treasury has published the Chancellor’s annual remit and recommendations to the Bank of England’s Financial Policy Committee (FPC), setting the government’s economic policy context and steering the UK macroprudential authority’s priorities for the coming year. The remit emphasises maintaining macroprudential and regulatory standards while asking the FPC to identify where the financial system could contribute more to sustainable economic growth without undermining financial stability, and it reinstates sustainable finance as a government priority that the FPC should support under its secondary objective. The recommendations ask the FPC to continue prioritising systemic vulnerabilities in market-based finance and to cooperate across jurisdictions, including through the Financial Stability Board, as well as to coordinate domestically with the Prudential Regulation Authority and Financial Conduct Authority and engage with bodies such as The Pensions Regulator and Payment Systems Regulator. They also set expectations for ongoing work on climate and nature-related financial risks, geopolitical risks, and non-financial risks including cyber and operational resilience, with explicit reference to monitoring implementation of the critical third parties regime and considering financial stability risks from emerging technologies including artificial intelligence. The remit further highlights coordination with monetary policy by having regard to the Monetary Policy Committee’s settings and forecasts, consideration of material risks to public funds in assessing actions, and evidence requirements where the FPC recommends legislative changes. In its statutory response, the FPC welcomed the recommendations and set out planned and ongoing work, including moving its main bank capital stress test from an annual to a biennial frequency from 2025 and recommending that the de minimis threshold for the loan-to-income flow limit be updated, which would exempt lenders extending residential mortgages of less than GBP 150 million per annum. The Committee also flagged expected publication of its latest cyber stress test findings and a report on the channels of financial stability risk from artificial intelligence and its monitoring approach in the first half of 2025, alongside continued work on non-bank vulnerabilities, including putting in place the Contingent NBFI Repo Facility as a first phase of new tools for lending to non-bank financial institutions during severe gilt market disruption.

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