PRA speaks on balancing innovation with regulation

David Bailey of the PRA has spoken on how it is working to help foster innovation in the UK’s banking and insurance sectors. Externally, its efforts to date have focussed on reducing the regulatory burden for firms, particularly so far in relation to insurance reporting and its current work on bank remuneration requirements. It has now embedded its secondary objective into the way it works, which has resulted in immediate policy decisions in areas such as Basel 3.1, where it will take the opportunity of the need to implement international standards to tailor its rules to reflect UK-specific circumstances. It now also has both a new bank and new insurer start up unit, run jointly with the FCA.

The PRA also needs to get the balance right between on the one hand setting lengthy and detailed expectations and on the other limiting itself just to high level principles.� The solution is probably a middle ground, but an approach that needn’t be the same for each issue.