Vida FatemiPRA has published a report setting out conclusions to its review of its ring-fencing rules.
PRA looked at the intents of the ring-fencing regime, its statutory objectives, the legal ring-fencing requirements and feedback to questionnaires it sent to RFBs.
The overall conclusion is that most rules are working well and firms appear to understand them. PRA is happy that the rules support the statutory regime well, meet the legal aims and operate effectively.
PRA identified some potential areas of improvement to rules and associated guidance, including:
- rules relating to the provision of services to RFBs from non-ring-fenced parts of a group: PRA has identified potential overlap with its rules on operational resilience;
- rules relating to arm’s length transactions, specifically that PRA might be able to reduce the frequency with which RFBs must review their internal policies on the requirement to transact only on an arm’s length basis;
- modifications of rules relating to governance arrangements: PRA has made several modifications to these rules appropriate to specific RFBs. PRA thinks there could be grounds for granting longer lasting rule modifications.
PRA will also re-assess:
- the level of consolidation at which some of the governance rules apply; and
- one annual regulatory report, relating to RFB tax exposures, which may be unnecessary given the materiality of the amounts reported.
PRA will also consider minor changes, such as making clear that a “governing body” does not include senior management committees.