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Home > Prudential Regulation Authority

Prudential Regulation Authority

The Prudential Regulation Authority (PRA) was created as a part of the Bank of England by the Financial Services Act (2012) and is responsible for the prudential regulation and supervision of around 1,500 banks, building societies, credit unions, insurers and major investment firms. The PRA’s objectives are set out in the Financial Services and Markets Act 2000 (FSMA). The PRA has three statutory objectives:

  1. a general objective to promote the safety and soundness of the firms it regulates;
  2. an objective specific to insurance firms, to contribute to the securing of an appropriate degree of protection for those who are or may become insurance policyholders; and
  3. a secondary objective to facilitate effective competition.
The PRA advances its objectives using two key tools. First through regulation, it sets standards or policies that it expects firms to meet. Second, through supervision, it assesses the risks that firms pose to the PRA’s objectives and, where necessary, takes action to reduce them.

The PRA’s approach to using regulation and supervision has three characteristics – it is:
  • Judgement based: the PRA uses judgement in determining whether financial firms are safe and sound, whether insurers provide appropriate protection for policyholders and whether firms continue to meet the Threshold Conditions.
  • Forward looking: the PRA assesses firms not just against current risks, but also against those that could plausibly arise in the future. Where the PRA judges it necessary to intervene, it generally aims to do so at an early stage.
  • Focused: the PRA focuses on those issues and those firms that pose the greatest risk to the stability of the UK financial system and policyholders. A stable financial system is one in which firms continue to provide critical financial services – a precondition for a healthy and successful economy.
The PRA does not seek to operate a “zero-failure” regime. Rather, it seeks to ensure that a financial firm which fails does so in a way that avoids significant disruption to the supply of critical financial services.

The Prudential Regulation Authority is a UK public regulatory body. It has no corporate relationship with Prudential plc or any of its affiliates.

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Latest news and publications

26.07.17​ ​PRA publishes CP14/17 ‘Strengthening individual accountability in insurance: extension of the Senior Managers and Certification Regime to insurers’
20.07.17​ ​PRA issues an  Update on insurance special purpose vehicles, following HM Treasury’s release of its updated Risk Transformation Regulations 2017
20.07.17​ ​PRA publishes final policy relevant to the banking and insurance sectors
13.07.17​ ​PRA publishes CP13/17 ‘Pillar 2 liquidity’
12.07.17​ ​PRA publishes CP12/17 ‘Pillar 2A capital requirements and disclosure’

Key initiatives

Quick links to four of the PRA’s key initiatives: i) Strengthening accountability; ii) Solvency II; iii) CRD IV; and iv) Structural reform, are available below.

The PRA and Financial Conduct Authority have developed the new Senior Managers Regime, Certification Regime and Senior Insurance Managers Regime which were implemented on 7 March 2016. The Financial Services and Bank of England Act 2016 includes amendments to the regimes. Updates and information are available in this section. ​More »

The Solvency II Directive for insurers was implemented on 1 January 2016. Updates and information for the UK insurance industry is available in this section of the website. More »

​The Capital Requirements Directive and Capital Requirements Regulation (collectively ‘CRD IV’) came into effect on 1 January 2014 for banks, building societies and investment firms. Updates and information about CRD IV are available in this section of the website. More »

Structural reform refers to legislation introduced to improve the resilience and resolvability of banks by making changes to their structure. The PRA is required to make rules to implement the ring-fencing of core UK financial services and facilities. Ring-fencing is due to be implemented from 1 January 2019. More »