The BoE has published its response to the remit for the Prudential Regulation Committee (19 January 2023) in its letter from Andrew Bailey, Governor, to Jeremy Hunt, Chancellor. The letter responds to the Chancellor’s letter dated 8 December 2022 setting out recommendations to the Prudential Regulation Committee (PRC).
The response recaps the PRA’s primary objectives to:
– promote the safety and soundness of the firms it regulates; and
– contribute to the securing of an appropriate degree of protection for insurance policyholders.
The new secondary objective for the PRA, which will be introduced by amendment to the Financial Services and Markets Act 2000 (FSMA), is to facilitate, subject to aligning with relevant international standards, the international competitiveness of the UK economy, and its growth in the medium to long term.
To advance its objectives, the PRA has:
– continued to ensure the UK banking and insurance sectors have adequate financial and non-financial resources for current and future risks;
– acted to implement necessary prudential reforms in a range of areas;
– adjusted policies inherited from the EU where they did not meet the PRA’s and FCA’s objectives; and
– continued pursuing its existing secondary competition objective through multiple means.
The PRC will seek to support the government’s ambitions to encourage economic growth in the interests of consumers and businesses by having regard to the government’s economic programme and recommendations when considering how to exercise the PRA’s general functions.
The response also addresses how the PRC, where relevant and practical, has taken steps to support the government’s strategy to promote the international competitiveness of the UK, including integrating the new secondary objective into the PRA’s internal processes and its policy cycle once it is enacted.