The Prudential Regulation Authority has published the annual report of its statutory Cost Benefit Analysis Panel, covering the period from 1 March 2025 to 28 February 2026. The report shows the panel becoming more involved earlier in policy development, with a focus on strengthening how the PRA and the Bank of England build and present cost benefit analysis for new prudential and financial market infrastructure rules. Across the year, the panel reviewed six formal CBAs in consultation papers, provided early input on two additional PRA CBAs, contributed to updated statements of policy on both authorities’ approach to CBA, and concluded that the PRA’s materiality threshold for panel review of direct impacts on PRA-regulated firms of plus or minus GBP 10 million continues to operate as intended. A central theme was that CBA should be embedded in policy design rather than used only at the end of the process. The panel reported that early engagement improved the quality of more complex analyses, including work on funded reinsurance, captive insurance and loan to income flow limits, and noted that the PRA’s updated approach to CBA now expressly envisages early input for more complex cases. The report also highlights continued work on methodology, including panel feedback on the PRA’s models for estimating incremental compliance costs and the publication of a technical note on the PRA Standard Cost Model to improve transparency and gather evidence on assumptions and benchmarks. In individual cases, the panel’s feedback focused on clearer explanation of behavioural effects, stronger evidence for cost estimates, use of scenarios and ranges where quantification is difficult, and better articulation of benefits where precise monetisation is not possible. Looking ahead, the panel expects to continue reviewing relevant PRA and Bank CBAs during 2026/27 and to keep advising on improvements to CBA methodologies, including further work on modelling approaches where capacity allows.

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