The Prudential Regulation Authority has published its annual report for the year ended 28 February 2026, alongside the Prudential Regulation Committee’s report to the Chancellor on the adequacy of PRA resources and the independence of its functions. The report sets out a year focused on finalising major prudential reforms while maintaining emphasis on resilience, including completion of the UK Basel 3.1 framework for deposit takers, finalisation of the Strong and Simple regime for small domestic deposit takers, insurance reforms under Solvency UK, and continued work on operational resilience, artificial intelligence and the critical third parties regime. The PRC concluded that the PRA had adequate resources to deliver its objectives and exercised its functions with appropriate independence from the Bank of England, despite a 4% reduction in budgeted headcount. On banking, the report highlights Basel 3.1 taking effect from 1 January 2027, except for the internal model approach for market risk, which moves to 1 January 2028, alongside final rules for the simplified Strong and Simple capital regime, updated expectations for international bank branches, securitisation reforms, remuneration changes and the Future Banking Data programme, including deletion of 37 underused or duplicative reporting templates. In insurance, it points to the 2025 Life Insurance Stress Test, which found major UK life insurers resilient and for the first time published individual firm results, as well as faster matching adjustment approvals, the Matching Adjustment Investment Accelerator, streamlined rules for insurance special purpose vehicles and ongoing scrutiny of bulk purchase annuity and funded reinsurance risks. Cross-sector work included phase 1 Senior Managers and Certification Regime reforms, updated climate risk expectations, implementation of solvent exit planning for banks and preparation for supervision under the critical third parties regime. The report also says the PRA met all statutory authorisation deadlines over the year, completed 100% of SM&CR cases within the three-month service standard and authorised eight new firms. Next steps flagged in the report include implementation of the insurer solvent exit policy from 30 June 2026, publication of final securitisation rules in 2026 H2, a summer 2026 consultation on a captive insurance regime, and public representations on the annual report by 25 September 2026.
Prudential Regulation Authority2026-06-25
Prudential Regulation Authority publishes annual report highlighting Basel 3.1 finalisation and adequate resources finding
The Prudential Regulation Authority’s 2025/26 annual report says it finalised major prudential reforms while judging the banking and life insurance sectors resilient in stress tests. Key measures included Basel 3.1 from 1 January 2027, with market risk internal models delayed to 1 January 2028, the Strong and Simple regime for smaller banks, Solvency UK insurance changes and further operational resilience work. The Prudential Regulation Committee concluded the PRA had adequate resources and appropriate independence despite a 4% budgeted headcount reduction.