Supervisory Statement SS2/25 from the Prudential Regulation Authority (PRA) provides guidance on prudential considerations for UK insurance and reinsurance undertakings transferring risk to Special Purpose Vehicles (SPVs). It clarifies expectations for ensuring such transfers comply with Solvency II requirements, focusing on risk transfer validity, capital relief recognition, and supervisory approval processes. This matters because it aims to enhance transparency and risk management in reinsurance arrangements, reducing potential regulatory arbitrage while supporting efficient risk mitigation for insurers amid evolving market dynamics.
Suggested considerations
Immediate Review (by Q1 2026): Conduct gap analysis of all existing SPV portfolios against SS2/25 criteria, documenting ERT evidence and collateral adequacy.
Governance Updates: Enhance board policies for SPV approvals, including mandatory stress testing (e.g., 1-in-200 year events) and independent validation by external actuaries.
Pre-Transaction Processes: Implement PRA notification templates for transfers >10% SCR; prepare deal packs with legal opinions on SPV independence.
Reporting Enhancements: Update internal systems for RFR disclosures on SPV exposures; train Senior Insurance Managers (SIMs) on accountability under SIMR.
Remediation: For non-compliant legacy SPVs, unwind or restructure by June 2027, notifying PRA of plans by March 2027.
What changed
- Risk Transfer Validation: Firms must demonstrate that SPV risk transfers provide genuine economic risk transfer (ERT), not just accounting or regulatory capital relief, with PRA emphasizing...
Capital Relief Criteria: Introduces stricter tests for recognizing capital relief, including full collateralization requirements, independent third-party guarantees, and prohibitions on circular...
Governance and Documentation: Mandates robust board-level oversight, detailed transaction documentation (including stress testing and scenario analysis), and pre-transaction PRA notification for...
SPV Oversight: SPVs must be structured to operate independently, with PRA reserving rights to challenge approvals if governance is inadequate or conflicts of interest arise.
Alignment with Solvency II: Builds on existing rules (e.g., Article 211-213) but provides PRA-specific interpretations, including updated expectations on limited risk appetite and post-transfer...
Compliance impact
Urgency: High – This is not a full regime shift but imposes immediate review obligations on firms with SPV exposure (estimated 20-30% of PRA-regulated insurers). Non-compliance risks capital add-ons, transaction disapprovals, or enforcement under PRA's Fundamental Rules, especially as PRA ramps up thematic supervision post-2025. Matters for capital efficiency in a high-interest-rate environment where SPVs are popular for cat risk.
The PRA has published LIAF03/25, a collection of final low impact rule amendments.
Why this matters
This is a regulatory update from the PRA on low impact rule amendments, which is likely to be of interest to banks, asset managers, and wealth managers in the banking, investment management, and wealth management sectors.
The Prudential Regulation Authority’s (PRA) update to the Prime Minister on work to support economic growth.
Why this matters
This appears to be a general update from the PRA to the Prime Minister on their work to support economic growth, which would be relevant for a range of financial services firms across the banking, investment management, and wealth management sectors.
PS27/25 finalizes the PRA's policy to delete 37 redundant banking regulatory reporting templates (34 FINREP, 2 COREP, and PRA109) as the first phase of the Future Banking Data (FBD) programme, aiming to reduce reporting burdens while maintaining supervisory data quality. This matters for PRA-regulated banks as it delivers immediate cost savings and signals broader regulatory simplification, aligning with the PRA's secondary competitiveness and growth objective.
Key dates
11 November 2025 Deadline
- Q3 2025 remittance deadline (precedes PS publication, so no concession for early non-reporting)
8 December 2025
- Publication of PS27/25, finalizing policy and responses to CP21/25 consultation
31 December 2025
- Effective date for revised rules, amended SS34/15, and deletions; applies to reporting reference dates falling on or after this date (avoids 2025 Q4 submissions where relevant)
Suggested considerations
Review and update internal reporting systems, processes, and controls to cease submission of the 37 deleted templates for reference dates from 31 December 2025 onwards.
Confirm applicability of consolidated FINREP scoping rules (Chapters 5A–5F) and adjust scoping for remaining templates, incorporating clarified conditions.
Assess eligibility for individual FINREP waivers under the updated framework if part of a UK consolidation group; apply to PRA if criteria met (90-95% asset contribution).
Update compliance policies and training to reflect SS34/15 amendments and aligned remittance deadlines.
Review Pillar 3 disclosure obligations for any ongoing requirements tied to deleted templates and prepare for potential future changes.
What changed
- Deletion of 37 whole reporting templates identified as duplicative, outdated, or low-value: 34 FINREP templates, 2 COREP templates (C05.01 and C05.02, now obsolete), and PRA109.
Consolidation of remaining FINREP scoping provisions into a single section of the PRA Rulebook (new Chapters 5A–5F of the Reporting (CRR) Part), with clarifications to unclear or duplicative...
Alignment of FINREP remittance deadlines to 30 business days for reports under Article 430(3), Article 11(2), and new Chapters 5A–5F.
Updates to Supervisory Statement SS34/15 – Guidelines for completing regulatory reports to reflect deletions and consolidations.
Refinements to the waiver framework for individual UK FINREP reporting in UK consolidation groups (excluding ring-fenced groups), allowing waivers if a single entity contributes 90-95% of group...
Compliance impact
Urgency: Medium – Changes are simplificatory (deletions reduce burden), with immediate effect from 31 December 2025, but no new requirements or penalties for non-compliance with deleted items; firms must act promptly to decommission processes and avoid erroneous submissions. This matters as it lowers ongoing costs (especially for larger reporters) and sets precedent for FBD phases targeting further efficiencies, but smaller firms see limited benefit without broader reforms.
The Prudential Regulation Authority (PRA) has issued PS26/25, finalizing the withdrawal of Supervisory Statement (SS) 20/15, which previously set prescriptive expectations for building societies' treasury and lending activities, effective immediately upon publication on 5 December 2025. This deregulatory move reduces administrative burdens, enhances proportionality across deposit takers, and promotes competition by aligning building societies more closely with banks, while relying on existing tools like the PRA Rulebook, SMCR, and routine supervision for risk management. It matters for compliance teams as it eliminates specific guidance often misinterpreted as binding requirements, freeing firms to tailor risk frameworks but requiring vigilance on broader prudential expectations.
Suggested considerations
Review and update policies: Building societies must confirm internal treasury/lending frameworks align with remaining requirements (e.g., PRA Rulebook, Building Societies Act 1986, ICAAP/SREP under amended SS31/15); remove any SS20/15-specific references or processes.
Assess risk management: Evaluate use of derivatives or treasury tools for compliance with non-prescriptive expectations; ensure SMCR accountability and board oversight.
Update governance documents: Revise ICAAP/SREP processes per SS31/15 amendments; document rationale for tailored approaches to demonstrate proportionality.
Engage supervisors: No immediate reporting mandated, but proactive dialogue recommended for firms previously on extensions or complex approaches.
Monitor related reforms: Track Strong and Simple framework (e.g., PS4/26, PS20/25) for SDDT capital/liquidity simplifications referencing this change.
What changed
- Full deletion of SS20/15: Removes all expectations on treasury and lending activities, including the "Treasury Approaches" framework, without replacement.
Consequential amendments: Updates SS31/15 (Internal Capital Adequacy Assessment Process and Supervisory Review and Evaluation Process) to excise references to SS20/15.
Alignment with broader policy: Addresses inconsistencies with PRA's approach for banks, improved sector risk management maturity, and proportionality for smaller firms; supports objectives of safety,...
No new rules imposed: PRA deems existing tools sufficient, including Building Societies Act 1986 restrictions, PRA Rulebook, SMCR, and supervision; derivatives permitted only for risk management...
Compliance impact
Urgency: Medium – Effective immediately (5 December 2025), but deregulatory nature reduces burdens rather than imposing new obligations; critical for year-end 2025/early 2026 planning to avoid legacy SS20/15 misapplication. Matters as it shifts from prescriptive "hard limits" (often treated as rules) to principles-based supervision, enabling flexibility but heightening reliance on firm-specific risk assessments amid PRA's focus on competition and growth; non-compliance risks arise from over-reliance on withdrawn guidance or inadequate tailoring.
This report has been informed by the PRA and FCA’s ongoing regulation and supervision of mutuals and by direct engagement with mutuals and their trade associations in sessions around the country throughout 2025.
Why this matters
This report provides an overview of the mutual landscape, informed by the PRA and FCA's ongoing regulation and supervision. It is likely to be informational in nature, providing insights into the mutual sector rather than announcing any new regulatory changes.
CP22/25 is a consultation paper on post-implementation amendments to UK Solvency II reporting and disclosure requirements, published by the PRA on 4 December 2025. The consultation addresses feedback and queries from insurance firms following the substantial reduction in reporting templates implemented at the end of 2024, clarifying expectations for compliance with the revised Reporting Part of the PRA Rulebook across multiple technical areas including accident/underwriting year reporting, annuity reporting by currency, and internal model governance disclosures.
Key dates
4 December 2025
- PRA published CP22/25 consultation paper
31 December 2025
- Baseline date for commencement of new annual quantitative reporting template requirements (AoC.01) for firms with financial year-end on or after this date
31 December 2025
- Baseline date for commencement of quarterly QMC.01 reporting for internal model firms with financial year-end on or after this date
55 business days after quarter Deadline
end; - Deadline for quarterly QMC.01 submission (internal model firms)
100 business days after financial year Deadline
end; - Deadline for annual AoC.01 submission (internal model firms and groups)
Suggested considerations
*Immediate Actions (January-February 2026):
*Review consultation paper: Obtain and analyze CP22/25 in full to understand proposed amendments
*Assess applicability: Determine which reporting requirements apply to your firm (internal model status, portfolio types, reporting obligations)
*Identify gaps: Compare current reporting processes against PRA expectations outlined in the supervisory statement (SS4015)
*Engage supervisory contacts: Discuss any planned changes to reporting methodology (e.g., accident vs. underwriting year classification) with PRA supervisory contacts prior to implementation
What changed
The consultation introduces clarifications and amendments to Solvency II reporting requirements in several critical areas:
Reporting Framework Modifications
Accident or underwriting year reporting: The PRA sets expectations for how firms should apply options within the Reporting Part of the PRA Rulebook regarding temporal classification of claims.
Annuity reporting by currency: Specific guidance on reporting annuities stemming from non-life obligations disaggregated by currency.
RBNS claims development: Clarification on reporting of reported but not settled (RBNS) claims and their development patterns.
Internal Model Requirements
Firms using partial or full internal models for Solvency Capital Requirement (SCR) calculation must describe governance information including responsible roles, specific committees, their tasks,...
PS25/25 is the PRA's policy statement providing feedback on CP10/25 and issuing updated Supervisory Statement SS5/25, which replaces SS3/19 to enhance banks' and insurers' management of climate-related financial risks through strengthened governance, risk management, scenario analysis, data quality, and disclosures. It matters because it sets a higher regulatory bar for embedding climate risks proportionately into core processes like ICAAP, ILAAP, ORSA, and financial reporting, promoting resilience and strategic decision-making amid evolving climate threats.
Key dates
3 December 2025
- PS25/25 and SS5/25 published; SS5/25 effective immediately, replacing SS3/19
Within 6 months (by ~June 2026)
- Firms assess gaps against new expectations and develop remediation plans (industry guidance)
Ongoing
- Forward-looking, strategic implementation proportionate to risks; PRA may request progress evidence
Suggested considerations
Conduct gap analysis against SS5/25 within 6 months and remediate (e.g., update governance, risk frameworks, CSA processes).
Integrate climate risks into board oversight, strategy, risk registers, ICAAP/ILAAP (banks), ORSA/stress testing (insurers), and financial reporting.
Perform CSA exercises commensurate with exposures, using suitable scenarios to inform decisions; enhance data quality and disclosures.
Ensure senior accountability and alignment with standards like SS1/21.
What changed
The main changes in SS5/25 from SS3/19 and CP10/25 responses include:
Proportionate application clarification: New 'Overarching aims' section in Chapter 3 explains how firms should tailor expectations to their climate risk exposure, business size, and complexity via a...
Governance strengthening: Boards and senior management must actively oversee climate risks, embedding them in strategy and ensuring accountability.
Risk management enhancements: Integrate climate risks into existing frameworks/risk registers (supplementary sub-registers allowed); 'accept, manage, avoid' is suggestive, not mandatory; aligns with...
Climate scenario analysis (CSA) advancements: Firms must use CSA strategically for decisions; flexibility on number/type of scenarios, reverse stress/sensitivity analysis, and longer horizons...
Compliance impact
Urgency: High – Effective immediately (3 Dec 2025), requiring significant uplift to existing approaches; non-compliance risks supervisory scrutiny, as PRA expects ambitious, ongoing progress and may request evidence. Matters for capital/liquidity planning, resilience, and strategic viability amid maturing climate risk landscape.
SS5/25 is the PRA's updated supervisory statement, published on 3 December 2025, replacing SS3/19 and setting enhanced expectations for banks and insurers to manage climate-related risks through governance, risk management, scenario analysis, data quality, and disclosures. It matters because it represents a step change from awareness-raising to embedding robust, proportionate practices that integrate climate risks into core prudential processes like ICAAP, ILAAP, ORSA, and capital planning, aligning with the PRA's objectives for firm safety and soundness amid evolving physical and transition risks.
Key dates
April 2025
Consultation paper CP10/25 issued (feedback incorporated in final policy)
Within 6 months of 3 December 2025 (by ~3 June 2026)
Firms assess gaps against new expectations and develop implementation plans
3 December 2025
Publication of PS25/25 and SS5/25; replaces SS3/19 effective immediately
Suggested considerations
Conduct materiality assessment of climate risks to scope proportionality (leverage TCFD/CSRD work).
Integrate into risk frameworks: Update risk registers, ICAAP/ILAAP/ORSA/SCR with quantitative metrics, scenarios, and controls; adjust underwriting/pricing/collateral.
Perform climate scenario analysis: Model impacts on capital/liquidity/solvency using plausible pathways.
Enhance data: Source/assess granular data (e.g., location/sector/hazards), document proxies/limitations.
What changed
- Replaces SS3/19 entirely: Introduces a more mature, consolidated framework reflecting international standards (e.g., BCBS), with detailed transmission channels for climate risks across credit,...
Governance enhancements: Emphasizes board accountability, integration into business strategy, climate risk appetite statements, and linkage to Senior Managers & Certification Regime (SM&CR) without...
Risk management integration: Requires embedding climate risks into existing frameworks with quantitative metrics/limits where material; detailed mapping of risks (e.g., physical/transition via...
Scenario analysis: Firms must conduct climate scenario exercises capturing plausible pathways, impacts on capital/liquidity/solvency, with transparent assumptions and management challenge;...
Data expectations: Critical assessment of data sources/quality (e.g., geographic/sectoral for banks, hazard/vulnerability for insurers); use proxies with documented limitations.
Compliance impact
Urgency: High – Effective immediately with a 6-month window (~June 2026) for gap closure, this demands significant operational uplift (e.g., data, scenarios, integration) amid PRA's shift to enforcement; non-compliance risks supervisory action, given climate risks' materiality to prudential stability and alignment with global standards.
The PRA Regulatory Digest is for people working in the UK financial services industry and highlights key regulatory news and publications delivered for the month.
Why this matters
This regulatory digest covers a range of topics relevant to banking, investment management, and wealth management firms operating in the UK. The low urgency indicates this is informational content summarizing key regulatory news and publications for the month.
The PRA has set the 2025 O-SII buffer rates for ring-fenced banks, large domestic firms, and large building societies
Why this matters
This regulatory update is relevant for ring-fenced banks, large domestic banks, and large building societies, as it sets the 2025 O-SII buffer rates for these firms. This impacts their prudential and capital requirements, as well as their authorization and reporting obligations.
The PRA disclosure of UK headquartered G-SIIs for 2025.
Why this matters
This regulatory update is relevant to UK headquartered globally systemically important institutions (G-SIIs) in the banking, investment management, and wealth management sectors.
The PRA has published the list of designated O-SIIs for 2025
Why this matters
This regulatory update is relevant to banks, wealth managers, and the broader financial services industry as it designates certain firms as Other Systemically Important Institutions (O-SIIs), which have additional prudential and operational requirements.
This letter sets out the key findings from our annual assessment and the actions we expect you to take.
Why this matters
This regulatory update from the PRA focuses on the annual assessment of the credit union sector, which falls under the banking and credit sector. The key topics covered are prudential and capital requirements, which are relevant for banks and credit unions.
The table below shows the outcomes of the annual DLT assessment for PRA relevant currencies, which will be effective from 1 January 2026.
Why this matters
This regulatory update from the PRA is relevant to banking, investment management, and wealth management firms, as it covers prudential and capital requirements, operational resilience, and reporting obligations.
PS23/25 from the PRA and FCA finalizes amendments to Binding Technical Standards (BTS) 2016/2251 under UK EMIR, introducing an indefinite exemption for single-stock equity options and index options from bilateral margin requirements, removing IM obligations on legacy contracts for firms falling below thresholds, and allowing alignment with third-country jurisdictions' timelines for IM assessments. These changes reduce operational burdens and enhance competitiveness for UK firms trading non-centrally cleared derivatives, following feedback from CP5/25, while maintaining prudential standards.
Suggested considerations
Review and update internal policies, procedures, and systems to cease IM/VM exchange for exempted single-stock equity options and index options post-27 November 2025; confirm no ongoing obligations for legacy contracts if below AANA thresholds.
Assess cross-border transactions: Document use of third-country jurisdictions’ timelines for IM thresholds where applicable, ensuring compliance with UK rules remains intact.
Conduct gap analysis on margin calculations, collateral management, and reporting; train front-to-back office teams on changes.
Retain records of AANA calculations and threshold monitoring to justify exemptions or relief.
For firms with collected IM on now-exempt legacy positions, evaluate release options per updated FCA instrument language.
What changed
- Indefinite exemption for equity options: Single-stock equity options and index options are permanently exempted from UK bilateral initial margin (IM) and variation margin (VM) requirements,...
Legacy contracts relief: Firms falling below the Average Aggregate Notional Amount (AANA) threshold no longer need to exchange IM on outstanding legacy non-centrally cleared derivatives contracts.
Third-country alignment: UK firms can adopt another jurisdiction’s threshold calculation periods and entry-into-scope dates for IM requirements when trading with counterparties subject to that...
Minor drafting tweaks for consistency between PRA and FCA instruments, including FCA adding text on releasing collected IM, with no policy impact.
Compliance impact
Urgency: High – Effective immediately since 27 November 2025 (over a month ago as of current date), firms risk non-compliance if systems still enforce outdated IM/VM for exemptions; operational fixes are needed urgently to avoid breaches, fines, or disputes, especially with phase-out of temporary equity options relief approaching 4 January 2026. Impacts cost savings but requires swift policy recalibration for ongoing UK EMIR adherence.
The PRA held roundtable meetings on artificial intelligence and machine learning (AI and ML) in the context of Supervisory Statement (SS)1/23 ‘Model risk management principles for banks’
AI Analysis
The Prudential Regulation Authority (PRA) held roundtable sessions on 20 and 22 October 2025 with 21 regulated firms to discuss AI and machine learning (AI/ML) adoption under Supervisory Statement SS1/23 on model risk management (MRM) principles for banks. This matters because it highlights PRA's strategic supervisory focus on AI/ML model risks, urging firms to enhance governance, risk appetite, monitoring, and validation to mitigate opacity, overfitting, and rapid performance degradation in these models. https://www.bankofengland.co.uk/prudential-regulation/publication/2025/november/pra-holds-model-risk-management-roundtable-on-ai | https://www.bankofengland.co.uk/-/media/boe/files/prudential-regulation/publication/2025/november/ai-roundtable-oct-2025.pdf
Key dates
24 November 2025
- PRA published roundtable summary and slides. https://www.bankofengland.co.uk/prudential-regulation/publication/2025/november/pra-holds-model-risk-management-roundtable-on-ai
20
22 October 2025; - PRA held CRO roundtable sessions with 21 firms on AI/ML MRM
Suggested considerations
Review and strengthen board-level model risk appetite statements to explicitly cover AI/ML opacity and uncertainty; integrate into governance triggers like re-validation.
Enhance model inventories for completeness, aggregate risk assessment, and cross-jurisdictional tiering challenges.
Update model development policies to evaluate AI/ML trade-offs (e.g., explainability vs. performance) and ensure datasets prevent overfitting.
Revise ongoing monitoring policies for more frequent, quantitative checks on AI/ML (e.g., beyond six months); define degradation triggers, fallback models, and kill switches.
Participate in PRA initiatives like MRM roundtables or AI Consortium for dialogue; align first/second-line defenses per SS1/23.
What changed
This is not a formal rule change but supervisory guidance via roundtable insights reinforcing SS1/23 principles (effective since 2023). Key emphases include:
Risk appetite: Boards must articulate AI/ML-specific model risk appetite pre-deployment to avoid exceeding tolerances, given higher uncertainty from opacity.
Model inventories and tiering: Address inaccurate/incomplete inventories and aggregate risks from deploying similar AI/ML across portfolios/jurisdictions; challenge tiering for complexity.
Model development: Assess trade-offs in performance vs. explainability/reliability; prefer simpler models where AI/ML gains are marginal; mitigate overfitting via representative datasets.
Ongoing monitoring: Increase frequency beyond tier-dependent intervals (e.g., six months may suffice for traditional models but not dynamic AI/ML); define quantitative triggers for re-validation.
Compliance impact
Urgency: Medium - Not critical as no new rules or deadlines, but high relevance for AI/ML users amid PRA's strategic MRM focus; non-compliance risks supervisory actions, given observations of gaps in monitoring and governance. Matters for banks scaling AI (rising adoption per industry views), as unaddressed risks like rapid degradation could amplify losses (e.g., historical model failures cost billions). https://www.articsledge.com/post/model-risk-management | https://www.finextra.com/blogposting/30372/the-pras-latest-view-on-ai-governance-implications-for-uk-banks
This is the first exercise conducted under the new Solvency UK regulatory regime implemented in 2024.
Why this matters
This regulatory update is focused on the results of a stress test for life insurers under the new Solvency UK regime, which is a prudential requirement for the insurance sector.
This joint PRA-FCA consultation (CP23/25 from PRA and Chapter 4 of FCA's CP25/33) proposes policy updates to regulatory fees, levies, and invoice processes for 2026/27, including new fee blocks for emerging activities like PISCES operators and targeted support, alongside adjustments to FOS/FSCS levies and payment timelines. It matters for compliance teams as it directly impacts budgeting, fee calculations, and cash flow management for fee-payers, with potential cost increases and procedural changes effective from April 2026.
Key dates
9 January 2026 Deadline
- Deadline for comments on targeted support proposals (FCA CP25/33 paras 2.11-2.18, questions 3-7)
16 January 2026
- Consultation close for all other proposals, including PRA-FCA joint changes; responses to [email protected]
February 2026
- FCA publishes feedback and rules on targeted support in Handbook Notice
March 2026
- FCA publishes feedback and rules on all other proposals (including Chapter 4) in Handbook Notice; Spring fee-rates consultation
April 2026
- PRA publishes feedback and rules on Chapter 4; changes effective for 2026/27 fee year (April-March)
Suggested considerations
Review current fee/levy exposure and model impacts of new blocks (e.g., PISCES, targeted support, DPC) and withdrawn FOS changes.
Assess invoice processes if paying £50,000+ in FCA/PRA fees; prepare for aligned due dates.
Submit consultation responses by deadlines, focusing on targeted support by 9 January 2026.
Budget for potential fee increases; monitor Spring 2026 fee-rates CP.
For applicants: Factor in new Category 4 fees for A.13 or crypto/DPC registrations.
What changed
- New fee structures: Introduction of a periodic fee block for PISCES operators based on regulated income (baseline £2,200 annual fee, variable above £500,000 threshold); extension of fee-block A.13...
Levy adjustments: Addition of targeted support to FSCS Class 2, Category 2.1 (life distribution/investment intermediation) for both FOS and FSCS levies based on annual eligible income; withdrawal of...
PRA-FCA joint proposals (Chapter 4): Amended invoice due dates for firms paying £50,000+ in annual FCA/PRA fees ("payments on account") to prevent overdue labels from procedural mismatches.
Other updates: Removal of £3 agent registration fee for payment institutions, RAISPs, and EMIs; policy tweaks like expanding skilled person reviews for motor finance to more lenders, pro-rating for...
Compliance impact
Urgency: High – Firms must act imminently on consultation responses (deadlines passed as of today, but feedback analysis pending March/April 2026 rules) to influence outcomes; changes affect 2026/27 budgets starting April, with cash flow risks from invoice timing and new fees for emerging activities like PISCES/DPC. Non-engagement risks unbudgeted costs and procedural breaches (e.g., overdue invoices).
The PRA's PS24/25 finalizes rules increasing Financial Services Compensation Scheme (FSCS) depositor protection limits from £85,000 to £120,000 and temporary high balances (THB) from £1 million to £1.4 million for firm failures on or after 1 December 2025, responding to consultation feedback in CP4/25. This matters for PRA-authorized deposit-takers as it enhances consumer protection amid inflation but requires urgent system and disclosure updates to avoid FSCS payout delays or regulatory breaches. Firms must prioritize single customer view (SCV) readiness and phased disclosure revisions to comply efficiently.
Key dates
1 December 2025 Deadline
- New deposit (£120,000) and THB (£1.4 million) limits apply to firm failures on/after this date; SCV systems must be updated; SS18/15 and SoP1/15 effective
As soon as practicable after 1 December 2025
- Provide updated information sheets, stickers/posters, and exclusions lists to depositors (encouraged immediately to avoid confusion)
31 May 2026 Deadline
- Firm deadline for all disclosure material updates and provision to depositors (six-month transition ends)
Suggested considerations
Immediate (pre-1 Dec 2025): Test and prepare SCV systems for new limits; review current contact data accuracy.
By 1 Dec 2025: Implement SCV updates; apply amended SS18/15 and SoP1/15.
Post-1 Dec 2025 to 31 May 2026: Revise and distribute updated information sheets, compensation stickers/posters (excluding non-in-person branches), and simplified exclusions lists; no proactive customer notification required but provide on request/in relevant circumstances.
Ongoing: Ensure disclosures remain clear/accessible; monitor for PRA feedback on banking hub models.
Document changes for audit trails; consider regtech for SCV automation.
What changed
- Increased Protection Limits: Standard FSCS deposit limit rises from £85,000 to £120,000; THB limit from £1 million to £1.4 million, applying to failures from 1 December 2025.
SCV System Updates: Firms must update SCV systems (used by FSCS for rapid compensation) to reflect new limits from 1 December 2025, including accurate contact details.
Disclosure Materials:
- Update information sheets on FSCS cover to reflect new limits and improve clarity/accessibility; provide to depositors as soon as practicable post-1 December 2025, by 31...
Rulebook Amendments (DPP Rules): Exclude FSCS sticker/poster display in branches without in-person depositor dealings; tighten "third-party premises" scope (e.g., banking hubs); other clarifications.
Supervisory Updates: SS18/15 and SoP1/15 amended for new rules, effective 1 December 2025, with guidance on third-party premises.
Compliance impact
Urgency: High – SCV updates are mandatory by 1 December 2025 with no transition, risking delayed FSCS payouts and enforcement if unprepared; disclosure changes allow six months but PRA emphasizes early action to prevent depositor confusion. Impacts operational resilience and conduct risk; non-compliance could trigger supervisory action, especially for firms with outdated systems. Cost-benefit analysis shows minimal PRA impact but higher potential FSCS payouts in failures.
This is the first exercise conducted under the new Solvency UK regulatory regime implemented in 2024. The PRA published sector-level results on 17 November 2025 followed by individual firm disclosure for the core scenario on 24 November 2025.
Why this matters
This regulatory update is focused on the results of a stress test for the life insurance sector, which falls under the Insurance & Pensions sector. The key topic is prudential and capital requirements, as the stress test is designed to assess the resilience of insurers under various scenarios.
The PRA's Discussion Paper 2/25 (published November 14, 2025) invites UK life insurers to provide feedback on potential regulatory reforms that would enable them to access **alternative forms of capital through risk transfer to capital markets**, outside traditional equity and debt issuance. This initiative aims to address capital constraints in the UK life insurance sector while maintaining policyholder protection and supporting long-term economic growth.
Key dates
14 November 2025
– Discussion paper published
2026
– PRA planned policy design and cost-benefit analysis (alongside HM Treasury work)
6 February 2026 Deadline
– Deadline for stakeholder responses to DP2/25
Suggested considerations
*For UK life insurers:
*Assess capital needs: Evaluate whether alternative capital structures could address your firm's capital constraints, risk management objectives, or product innovation goals.
*Prepare consultation response: Submit detailed feedback to the PRA by 6 February 2026 addressing the 15 consultation questions, particularly:
Q12: Key risks from increased capital flexibility and mitigation approaches
Q13: Views on balancing ease of authorisation against ongoing supervision intensity
What changed
The PRA is considering policy reforms centered on six core principles:
Capital Quality & Quantity: Alternative life capital structures must not lower the quality or quantity of capital required to support insurance risks.
Risk Transfer Focus: Structures should enable patient capital investment aligned with long-term liability profiles, allowing investors to forgo immediate returns for substantial future gains.
Capital Relief Priority: Alternative life capital should predominantly deliver capital relief proportionate to actual risk transfer—not balance sheet financing or illiquidity...
The PRA's PS22/25 finalizes an increase in the retail deposits threshold for the leverage ratio requirement from £50 billion to £75 billion, introducing a three-year averaging mechanism for calculations, effective 1 January 2026. This adjustment reflects nominal UK GDP growth since 2016 to maintain the Financial Policy Committee's original risk appetite while smoothing cliff-edge effects for firms like building societies. It matters for major UK banks and similar firms as it alters capital planning and leverage ratio applicability, potentially reducing immediate compliance burdens for those nearing the old threshold.
Key dates
5 March 2025
- PRA publishes Consultation Paper CP2/25 proposing £70 billion threshold
5 June 2025 Deadline
- Consultation response deadline
12 November 2025
- PRA issues PS22/25 with final policy
1 January 2026
- Final policy takes effect, applying new £75 billion threshold and three-year averaging
30 June 2026
- Cessation of modifications by consent disapplying leverage ratio rules
Suggested considerations
Review and update internal retail deposits calculations to incorporate three-year moving average methodology starting 1 January 2026.
Assess current and projected retail deposits against £75 billion threshold (and £10 billion non-UK assets) to determine leverage ratio applicability and adjust capital planning accordingly.
Prepare to meet 3.25% leverage ratio minimum plus buffers if thresholds breached, including systems updates for averaging and reporting.
For firms with modifications by consent: Plan transition back to full leverage ratio rules by 30 June 2026, including any necessary capital raises or disclosures.
Update governance, risk models, and board reporting to reflect changes; conduct gap analysis against PRA Rulebook appendices in PS22/25.
What changed
- Retail deposits threshold raised from £50 billion to £75 billion, adjusted upward from the CP2/25 proposal of £70 billion to account for further GDP growth to Q2 2025 (rounded to nearest £5...
Introduction of a three-year moving average for calculating retail deposits metric, replacing point-in-time values to mitigate volatility and aid capital planning, particularly for building societies.
Non-UK assets threshold remains unchanged at £10 billion.
Modifications by consent disapplying leverage ratio rules during review will cease on 30 June 2026.
These changes are implemented via updates to the Leverage Ratio – Capital Requirements and Buffers...
Compliance impact
Urgency: High – With effectiveness just after today (1 January 2026), firms near £50-75 billion in retail deposits face immediate recalibration of leverage exposures and capital buffers to avoid breaches, amplified by the shift to averaging which requires historical data reconstruction. Non-compliance risks PRA enforcement, heightened scrutiny, or capital inadequacy findings, but the higher threshold and averaging provide planning relief versus the status quo.
Guidelines to assist firms considering providing services under the Berne Financial Services Agreement.
Why this matters
The guidelines provide information to firms on providing services under the Berne Financial Services Agreement, which is relevant for banking, investment management, and wealth management firms seeking to operate in this area.
The PRA Regulatory Digest is for people working in the UK financial services industry and highlights key regulatory news and publications delivered for the month.
Why this matters
This is a general regulatory digest covering key updates across multiple sectors and topics relevant to UK financial services firms. The low urgency reflects the informational nature of the content.
**PS19/25** is the PRA's near-final policy statement finalizing how remaining Capital Requirements Regulation (CRR) provisions will be restated into the PRA Rulebook, effective January 1, 2027. This represents a critical step in the UK's transition away from assimilated EU law, giving the PRA expanded rule-making authority over UK banks, building societies, and investment firms while introducing targeted policy changes to securitisation, credit risk treatment, and ECAI mapping.
Key dates
28 October 2025
- PRA published near-final policy statement PS19/25
Q1 2026
- PRA intends to publish final policies and rule instruments alongside or shortly after final Basel 3.1 package publication
1 January 2026
- Implementation date for certain proposals finalized in PS12/25 (limited scope)
1 January 2027
- Implementation date for policies and requirements in PS19/25 (primary implementation date)
Suggested considerations
*Review the final policy statement when published in Q1 2026 to understand specific rule changes applicable to your firm's business model
*Assess securitisation impacts: If your firm engages in securitisation activities, particularly synthetic SRT structures with unfunded credit protection, evaluate compliance with clarified supervisory expectations in SS9/13
*Evaluate mortgage capital treatment: Firms with significant mortgage lending should assess impact of new capital rules for certain mortgage exposures
*Update ECAI mapping processes: Firms relying on external credit assessments must prepare for amendments reflecting Basel 3.1 implementation
*Establish implementation timeline: Develop a project plan for January 1, 2027 implementation, including:
What changed
The near-final policy confirms and finalizes the following substantive amendments:
Securitisation Requirements
Largely preserves current requirements and supervisory expectations with targeted policy changes
Introduces a new formulaic p-factor for the standardised approach to securitisation
Establishes new capital rules for certain mortgage exposures
Clarifies supervisory expectations for unfunded credit protection in synthetic Significant Risk Transfer (SRT) securitisations by adding expectations to SS9/13
Level of Application of CRR...
PS18/25, published by the PRA on 28 October 2025, retires the "refined methodology" for Pillar 2A capital calculations, replacing it with reliance on the Basel 3.1 Credit Risk Standardised Approach (CR SA) for greater risk sensitivity, transparency, and proportionality. This near-final policy simplifies the Pillar 2A framework, reduces administrative burdens, and aligns with broader Basel 3.1 implementation and the Strong and Simple regime for Small Domestic Deposit Takers (SDDTs), promoting safety, soundness, and competition. It matters because it directly impacts credit risk capital add-ons for affected firms, requiring updates to ICAAP/SREP processes ahead of Basel 3.1 timelines.
Key dates
28 October 2025
- PS18/25 publication with near-final policy and PRA feedback to CP9/24/CP7/24 consultations
January 2026
- PS2/26 published as final policy, minor adjustment to SS31/15 para 5.12A
Q2 2026
- Expected finalisation of CP12/25 Phase 1 proposals (Pillar 2A review, including IRB benchmarking removal)
1 July 2026
- Effective date for pension obligation risk amendments in SoP5/15 and SS31/15 clarifications (IRRBB changes partially deferred)
Basel 3.1 Implementation Date (TBD, aligned with CR SA go
live); - Retirement of refined methodology and related credit/operational risk changes
Suggested considerations
Review and update internal Pillar 2A methodologies, ICAAP/SREP documentation to remove refined methodology reliance and align with Basel 3.1 CR SA.
For SDDTs: Transition to SoP5/25 and SS4/25; assess impacts from PS20/25 overlap.
Model/calculate potential capital impacts from CR SA changes vs. prior IRB benchmarking adjustments.
Prepare for IRRBB/pension risk clarifications in SS31/15 submissions from 1 July 2026; monitor CP12/25 review.
Engage PRA supervisors on firm-specific transitions; update reporting (e.g., anticipate FSA076 streamlining).
What changed
- Retirement of Refined Methodology: Eliminates supervisory adjustments to Pillar 2A credit risk add-ons based on IRB benchmarking, as Basel 3.1 CR SA better captures risks and reduces gaps between...
Policy Material Updates:
- Near-final amendments to Statement of Policy (SoP) 5/15 – The PRA’s methodologies for setting Pillar 2 capital.
- Final amendments to Supervisory Statement (SS) 31/15 –...
IRRBB and Pension Obligation Risk: Clarifications only (no substantive changes); minor IRRBB updates in SS31/15 deferred due to ongoing review (CP12/25 Phase 1); pension risk amendments finalized.
Future Alignment: Proposals from CP12/25 (e.g., removing IRB benchmarking, streamlining FSA076/FSA077 reporting) to be finalized in Q2 2026 PS, not reflected here.
Compliance impact
Urgency: High – Firms must act now to recalibrate Pillar 2A capital ahead of Basel 3.1 and 1 July 2026 effective dates, as retirement eliminates adjustments that reduced add-ons for low-risk CR SA firms, potentially increasing capital requirements despite Basel 3.1 offsets. Non-compliance risks supervisory scrutiny in SREP/ICAAP, higher Pillar 2A requirements, and misalignment with simplified regimes; benefits include reduced complexity/burden long-term.
This regulatory update from the PRA provides information on its methodologies for setting Pillar 2 capital requirements, which is relevant for banks, asset managers, and wealth managers.
SS31/15 is the PRA's foundational supervisory statement establishing expectations for how UK-regulated banks and large investment firms must conduct their Internal Capital Adequacy Assessment Process (ICAAP) and how the PRA will evaluate these assessments through its Supervisory Review and Evaluation Process (SREP). This guidance is critical because it directly determines the capital requirements firms must maintain and establishes the supervisory framework through which the PRA assesses whether firms hold sufficient capital to cover material risks.
Key dates
29 July 2015
- SS31/15 first published, replacing PRA SS5/13 and PRA SS6/13
1 July 2026
- Effective date for updates to SS31/15 (as referenced in recent amendments)
Ongoing Deadline
- Firms must carry out ICAAP on a continuous basis in accordance with PRA ICAA rules
Suggested considerations
*Immediate Compliance Actions
*Establish ICAAP Framework: Implement a comprehensive ICAAP that covers all material risks identified by the firm and the PRA, including those specific to the firm's business model and risk profile
*Risk Identification and Assessment: Conduct thorough identification of all material risks (IRRBB, market risk, operational risk, concentration risk, group risk, pension obligations, foreign currency lending) and assess capital adequacy against these risks
*Stress Testing and Scenario Analysis: Develop and maintain robust stress testing and scenario analysis capabilities, including:
Results of stress tests carried out in accordance with CRR requirements for firms using IRB approaches or internal models
What changed
The supervisory statement establishes several core regulatory expectations:
ICAAP Requirements
Firms must assess on an ongoing basis whether they hold sufficient capital to cover all material risks, including interest rate risk in the banking book (IRRBB), market risk, operational risk,...
Firms must implement stress testing and scenario analysis as integral components of capital planning
The management body must be actively involved and engaged in all relevant stages of the ICAAP process
SREP Assessment Framework
The PRA reviews and evaluates:
Arrangements, strategies, processes and mechanisms implemented by a firm to comply with regulatory requirements
**PS20/25** represents the second and final phase of the PRA's "Strong and Simple Framework," establishing a significantly simplified capital regime for Small Domestic Deposit Takers (SDDTs) while maintaining their resilience. This near-final policy statement, published on 28 October 2025, fundamentally restructures capital requirements, liquidity rules, and operational frameworks for SDDTs—a critical development for smaller deposit-taking institutions seeking regulatory relief from disproportionate compliance burdens.
Key dates
2026 (specific date TBD)
– PRA to make final rules and policy covering the entire Basel 3.1 package once HM Treasury makes commencement regulations to revoke relevant CRR provisions
31 March 2026 Deadline
– Deadline for firms wishing to enter the SDDT regime to notify the PRA and benefit from the simplified framework at implementation
1 January 2027
– Implementation date for the simplified capital regime for SDDTs; the Interim Capital Regime will no longer apply
2027 (specific date TBD)
– PRA to implement restatement of CRR requirements (PS19/25)
Suggested considerations
*For SDDTs Currently Operating or Considering Entry:
*Notification Decision – Determine whether to enter the SDDT regime and submit notification to the PRA by 31 March 2026 if seeking to benefit from simplified rules.
*Policy Review – Conduct comprehensive review of PS20/25, related policy statements (PS18/25, PS19/25, PS8/25, PS14/25), and supporting methodologies (SoP5/25, SS4/25, amendments to SoP2/23).
*Capital Calculation Transition – Prepare systems and processes to transition from current capital calculation methodologies to Basel 3.1 standardised approaches with SDDT simplifications, including:
Removal of CCR and CVA calculations for derivatives
What changed
The simplified capital regime introduces structural changes across all three pillars of capital requirements:
Pillar 1 (Risk-Weighted Assets)
SDDTs must apply Basel 3.1 standardised approaches for credit risk and operational risk, with specific simplifications.
Due diligence requirements in the standardised approach to credit risk are disapplied for SDDTs.
Counterparty credit risk (CCR) for derivatives and credit valuation adjustment (CVA) risk are disapplied (with minor exceptions).
Market risk framework is simplified, with SDDTs applying the credit risk approach to trading book positions and removal of foreign-exchange and commodity risk capital requirements.
This regulatory update from the PRA sets out their approach to exercising certain powers related to securitization under the CRR rules. This is relevant for banking and capital markets firms that engage in securitization activities, as well as all firms subject to the Securitisation (CRR) Part of the PRA Rulebook.
This regulatory update from the PRA is relevant to banks, building societies, and PRA-designated investment firms. It sets out the PRA's approach to considering applications from these firms to not apply or modify rules in the Counterparty Credit Risk (CRR) Part of the PRA Rulebook, which is related to prudential...
This regulatory update from the PRA sets out their approach to granting waivers and permissions related to the Securitisation (CRR) Part of the PRA Rulebook. This is relevant for banking and capital markets firms that are subject to these rules.
PS17/25 establishes the **Matching Adjustment Investment Accelerator (MAIA) framework**, enabling PRA-regulated insurers to regularize and expand their use of matching adjustment (MA) in calculating capital requirements for certain long-duration insurance liabilities. This framework is significant because it provides a structured pathway for firms to optimize capital efficiency while maintaining prudential safeguards through exposure limits, eligibility assessments, and breach remediation mechanisms.
Key dates
27 October 2025
- PS17/25 final rules and policy material took effect; firms could begin applying for MAIA permission
31 December 2026 Deadline
- Implementation deadline for changes to MALIR reporting template
18 weeks after financial year Deadline
end; - Annual MAIA use report submission deadline (ongoing, annually)
2 months from breach identification Deadline
- Deadline to rectify breaches to avoid MA benefit reduction
Suggested considerations
*Immediate (Q4 2025 - Q1 2026):
*Assess eligibility for MAIA permission by reviewing current MA portfolio and prospective assets
*Establish contingency plans for scenarios where MAIA assets become ineligible
*Prepare MAIA permission application if pursuing the framework
What changed
The MAIA framework introduces the following regulatory requirements:
Permission and Eligibility Framework
Firms must obtain explicit MAIA permission from the PRA to use the accelerator
Permission grants authority to regularize previously non-compliant MA assets and apply MA to new eligible assets within defined parameters
Exposure Limits
Firms receive fixed monetary exposure limits calibrated using the Best Estimate of Liabilities (BEL) of the MA portfolio, net of reinsurance, at the time of permission grant
Limits remain fixed until the next formal variation of MAIA permission
Asset Eligibility and Assessment
Publication from the Bank, PRA and FCA to firms and financial market infrastructures highlighting observed effective practices of cyber response and recovery capabilities.
Why this matters
This regulatory update from the PRA, Bank of England, and FCA focuses on effective practices for cyber response and recovery capabilities, which is highly relevant for firms across the banking, payments, and technology sectors.
The PRA has published LIAC02/25, a consultation on proposed low impact amendments to rules and policy.
AI Analysis
The PRA's LIAC02/25 consultation, published on 16 October 2025, proposes low-impact amendments to its Rulebook and policy materials, including technical fixes, conditional disapplications, and miscellaneous corrections to enhance accuracy and align with prior policies. These changes matter for PRA-regulated firms as they ensure regulatory consistency with minimal operational burden, with most taking effect in late 2025 or early 2026 following the consultation period.
Suggested considerations
Submit consultation responses by 13 November 2025 via the PRA's Low Impact Amendments Process page, focusing on proposed disapplications, TMTP formula, ISPV rules, and miscellaneous changes.
Review and update internal policies for TMTP calculations to adopt the new 'Wr' formula from 31 December 2025 year-end, without restating priors.
Confirm compliance with ISPV 'no co-mingling' clarifications and SS2/25 updates by 23 December 2025.
Verify Rulebook references (e.g., Securitisation, parent undertakings) and adjust systems for effective dates like 19 January 2026.
For friendly societies/credit unions: Note zero minimum fees already reflected in 2025/26 invoices; no further action needed.
What changed
The main proposals include:
Conditional disapplication of PRA General Provisions to implement deference arrangements under the UK-Swiss Berne Financial Services Agreement.
Amendment to Transitional Measure on Technical Provisions (TMTP) Part, Rule 5.2, introducing a new formula for 'Wr' effective 31 December 2025, using existing 'Wq' values without retrospective...
Amendment to Insurance Special Purpose Vehicle (ISPV) Part, Solvency Requirements Rule 2.2A(3), clarifying the 'no co-mingling' requirement, effective 23 December 2025, alongside updates to SS2/25.
Miscellaneous amendments to the PRA Rulebook, such as glossary updates, fundamental rules, general provisions, interpretation, notifications, and policyholder protection parts.
Amendments made...
Compliance impact
Urgency: Low – These are explicitly "low impact" technical, typographical, and alignment amendments with no material capital, reporting, or operational shifts expected; many stem from prior consultations (e.g., CP8/25, CP12/23, PS10/25) and avoid retrospective changes. Firms should act promptly on response deadlines and upcoming effectives (e.g., December 2025) to prevent minor non-compliance, but resource allocation can be minimal given the non-substantive nature.
The PRA has published LIAF02/25, a collection of final low impact rule amendments.
Why this matters
This is a regulatory update from the PRA on low impact rule amendments, which is likely to be of interest to banking, investment management, and wealth management firms from a prudential, operational resilience, and reporting perspective.
PS21/25 implements reforms to PRA remuneration rules for banks, building societies, and PRA-designated investment firms, simplifying Material Risk Taker (MRT) identification, aligning deferral periods with international standards (4 years for non-SMF MRTs and 5 years for SMFs), and enhancing links to individual accountability under the Senior Managers Regime (SMR). These changes matter as they reduce regulatory burden, increase flexibility in bonus structures (e.g., marginal deferral rates and cash payments), and promote competitiveness while maintaining risk alignment, potentially reversing trends toward higher fixed pay.
Key dates
November 2024
Preceding joint consultation (CP16/24/PRA, CP24/23/FCA) closed prior to PS
15 October 2025
Publication date; some changes (e.g., deferral periods, pro-rata vesting) may apply to ongoing 2025 performance year and unvested prior awards at firm discretion
16 October 2025
Final rules and updated SS2/17 take effect; apply to performance years starting after this date (e.g., mandatory from 1 January 2026 for calendar-year firms)
Suggested considerations
Review and update MRT identification processes, applying simplified top 0.3% threshold and new proportionality exemptions.
Revise remuneration policies for deferral (4/5 years, marginal rates), upfront cash flexibility, and instrument expectations; update bonus award calculations.
Embed SMR-linked adjustments: Define criteria for chain-wide pay reductions on adverse outcomes; align Remuneration Committee oversight with PRA priorities and risk events.
For dual-regulated firms: Transition to PRA-cross-referenced FCA rules (SYSC 19D).
Optional early adoption for specified changes on 2025/unvested awards; document governance for RemCo approvals and board policies.
What changed
- MRT Identification: Simplified quantitative threshold to the top 0.3% of earners (assessed against risk impact); qualitative criteria unchanged; raised proportionality threshold for disapplying...
Deferral Periods: 4-year minimum for non-SMF MRTs (previously varied); reduced to 5 years for SMFs (from 7 years); aligns with FCA and international practice.
Deferral Rates: Marginal system—40% deferral on first £660,000 of variable remuneration, 60% above; replaces cliff-edge approach for proportionality.
Upfront Cash Flexibility: Removed equal cash/instrument split requirement (Remuneration 15.16 deleted); deferred portion should have higher instrument share as good practice (new SS2/17 para 5.44B);...
Individual Accountability: New rules/expectations for adjusting remuneration up the management chain for adverse outcomes; senior management accountable against PRA priorities; Remuneration...
Compliance impact
Urgency: High – Mandatory from performance years post-16 October 2025 (e.g., 2026 for most), with immediate opt-in possible; impacts 2026 bonus cycles, requiring swift policy rewrites amid year-end planning. Matters due to simplified but ownership-heavy MRT processes, SMR-pay linkages raising accountability risks, and flexibility needing robust justification to avoid supervisory challenge; non-compliance risks enforcement under PRA accountability regimes.
PS16/25 is the PRA's policy statement restating firm-facing organisational requirements from the MiFID Org Reg (e.g., outsourcing, record-keeping, risk management, compliance, internal audit, and governance) into the PRA Rulebook, with no material changes, to align with HMT's revocation of the EU regulation under FSMA 2023. This matters because it ensures continuity of prudential oversight for PRA-authorised firms post-revocation, preventing enforcement gaps in systems and controls while adapting provisions (e.g., supervisory function) to UK governance structures.
Key dates
9 October 2025
- PRA publishes PS16/25 with final rules and feedback to CP9/25 consultation
23 October 2025
- New PRA rules and technical standards come into force, coinciding with HMT's anticipated revocation of MiFID Org Reg via commencement order (FCA rules align on same date)
Prior to 23 October 2025
- HMT expected to lay second Statutory Instrument revoking remaining MiFID Org Reg provisions; PRA may delay/revoke rules if not made
Suggested considerations
Review and map existing MiFID Org Reg compliance processes against restated PRA Rulebook provisions (e.g., update policies on outsourcing, risk management, governance).
Confirm governing body oversight aligns with adapted Article 25 requirements; document any adjustments for UK structures.
Update internal references in algorithmic trading governance documents to new rule 2.2D.
Conduct gap analysis and training on minor clarifications; prepare for dual FCA/PRA alignment if applicable.
Monitor HMT commencement order; if delayed, reassess implementation plans.
What changed
- Restatement of requirements: Provisions from MiFID Org Reg Articles on outsourcing, record-keeping, control procedures, risk management, compliance, internal audit, and governance are transferred...
Supervisory function adjustment: Following consultation feedback, PRA retained Article 25 provisions but substituted "governing body" for "supervisory function" to fit UK firm structures, preserving...
Technical standards update: Minor amendment to algorithmic trading technical standards, replacing references to revoked MiFID Org Reg Article 23(2) with new PRA Rulebook rule 2.2D.
No policy or scope changes; adjustments mainly reflect PRA drafting style and respond to feedback for clarity.
Compliance impact
Urgency: High – Firms must act promptly as rules take effect on 23 October 2025 (past deadline as of current date), with no transition period; non-compliance risks enforcement gaps in core systems/controls post-revocation. Impact is low for substance (restatement only) but requires documentation updates to avoid supervisory scrutiny, especially for governance and outsourcing.
The PRA Regulatory Digest is for people working in the UK financial services industry and highlights key regulatory news and publications delivered for the month.
Why this matters
This is a general regulatory digest covering key updates across multiple sectors and topics relevant to UK financial services firms. The low urgency reflects the informational nature of the content.
PS15/25 introduces **new liquidity risk reporting requirements for major UK insurance firms**, closing data gaps identified during the March 2020 "dash for cash" and September 2022 LDI crisis. The policy mandates four new reporting templates for firms with significant derivatives or securities lending exposure, with implementation deferred to **30 September 2026** to allow adequate preparation time.
Key dates
30 September 2025
- PRA published PS15/25 (policy statement)
31 December 2025 Deadline
- Original implementation deadline (now superseded)
30 September 2026
- **Final implementation date for all liquidity reporting requirements**
First reporting reference date after 30 September 2026 Deadline
- Firms meeting threshold conditions must commence reporting
Three consecutive annual reporting reference dates
- Threshold for ceasing reporting once firms fall below thresholds
Suggested considerations
*Immediate Actions (by Q2 2026):
*Threshold Assessment: Determine whether your firm meets the £10 billion derivatives or £1 billion securities lending thresholds
*RFF Mapping: If applicable, identify ring-fenced funds with £500 million+ gross notional derivatives exposure
*System Readiness: Begin implementing technical infrastructure for monthly and daily reporting submissions
*Data Governance: Establish processes to capture and validate liquidity data in the required templates
What changed
The PRA's final policy establishes the following regulatory framework:
New Reporting Templates
Four new liquidity reporting templates have been introduced to capture previously unavailable data:
Annual committed facilities template
Monthly cash-flow mismatch template (short form)
Monthly cash-flow mismatch template for ring-fenced funds, matching adjustment portfolios, and remaining parts
Additional supervisory reporting requirements
Scope and Thresholds
Firms are subject to liquidity reporting if they meet both of the following conditions:
SS15/16 establishes the PRA's expectations for UK insurance firms using approved internal models to calculate their Solvency Capital Requirement (SCR), requiring them to maintain the ability to calculate SCR using the standard formula and submit standard formula SCR calculations for regulatory monitoring purposes. This guidance is critical because it ensures capital requirements remain reflective of actual firm risks and protects policyholder security by preventing model drift—where internal models diverge from underlying risk realities over time.
Key dates
25 October 2016
- Original SS15/16 publication
31 December 2018
- Document updated (referenced in original guidance)
September 2025
- Most recent update to SS15/16 published, clarifying expectations for firms with material non-life technical provisions
30 September 2026 Deadline
- Implementation deadline for liquidity reporting rules (related Solvency II development)
Four weeks after annual quantitative reporting submission Deadline
- Deadline for standard formula SCR reporting
Suggested considerations
*Maintain Dual Calculation Capability: Preserve the technical ability to calculate SCR using the standard formula, regardless of internal model approval status.
*Establish Annual Reporting Process: Implement procedures to calculate and submit standard formula SCR results annually through XBRL-enabled Excel or full XBRL format via BEEDS portal.
*Integrate into Risk Management: Incorporate standard formula SCR calculations into own risk and solvency assessment (ORSA), risk management, and model validation cycles.
*Obtain Senior Management Approval: Ensure standard formula submissions are reviewed and approved by appropriately authorized senior management before submission.
*Maintain Supporting Documentation: Retain quantitative and qualitative documentation supporting standard formula calculations to demonstrate appropriateness for model drift monitoring purposes.
What changed
The supervisory statement introduces several core regulatory expectations:
Internal Model Maintenance Requirement: Firms with approved internal models must maintain the capability to calculate SCR using the standard formula, even if they primarily use internal models for...
Standard Formula SCR Reporting: Firms using approved internal models to calculate solo SCR are expected to report standard formula SCR results privately to the PRA on an annual basis.
Model Drift Monitoring Framework: The PRA uses model drift ratios calculated at model approval and re-based following material changes in risk profile or major model changes to monitor whether...
Submission Format and Timing: Standard formula SCR information must be submitted through XBRL-enabled Excel files or full XBRL format, four weeks following firms' annual quantitative reporting...
Letter to chief financial officers of selected PRA-regulated deposit-takers which provides thematic feedback from the PRA’s review of written auditor reports received in 2025 covering IFRS 9 expected credit loss accounting (ECL) and accounting for climate risk.
AI Analysis
The PRA's Dear CFO Letter, issued on 30 September 2025 by David Bailey, provides thematic feedback to selected PRA-regulated deposit-takers based on its 2025 review of auditor reports on IFRS 9 expected credit loss (ECL) accounting and climate risk integration. It matters because it highlights persistent supervisory concerns around timely credit risk recognition, model limitations, recovery assumptions, and climate impacts amid economic uncertainty, urging firms to strengthen ECL processes to ensure safety and soundness.
Key dates
2025
- Auditor reports reviewed by PRA (basis for this feedback)
30 September 2025
- PRA issues Dear CFO Letter with thematic feedback
2026
- Next round of written auditor reporting on firms' progress against areas of focus, including data aggregation and securitisation impacts; firms encouraged to self-assess now
Suggested considerations
Conduct self-assessments against annex "areas of focus" (model risk, recovery, climate) and share with auditors ahead of 2026 reporting.
Enhance PMAs: Challenge completeness for emerging risks (e.g., interest rates, sectors); link to emerging risk analysis.
Model improvements: Monitor redevelopment plans; ensure granular monitoring, comprehensive reviews, skilled independent assurance; define model boundaries.
Recovery processes: Strengthen challenges to LGD recovery assumptions for vulnerable exposures.
This is not a formal rule change or new regulation but thematic feedback building on prior years, with "areas of focus" for improvement:
Model risk: Elevated due to macroeconomic/geopolitical uncertainty; firms must enhance post-model adjustments (PMAs) for completeness (e.g., affordability risks, sector vulnerabilities), granular...
Recovery strategies: Ongoing risk of historical bias in Loss Given Default (LGD) estimates; challenge realism of recovery assumptions for vulnerable sectors/borrowers.
Climate risks: Greater emphasis on identifying/assessing/modelling climate drivers in ECL (e.g., via expert judgement, stress tests); align with PRA's SS1/23 on model risk and upcoming clarifications...
Compliance impact
Urgency: High – Persistent issues from prior years (e.g., 2024 feedback) indicate elevated model risk in uncertain conditions could lead to PRA scrutiny, auditor findings, or enforcement if unaddressed; 2026 auditor reports will benchmark progress, risking heightened supervision. Matters for prudential stability as ECL underpins capital requirements.
The PRA's CP21/25 proposes deletion of 37 banking regulatory reporting templates—primarily 34 FINREP templates representing approximately one-third of all FINREP collections—as the first phase of its Future Banking Data (FBD) programme. This initiative aims to reduce annual reporting burden by approximately £26 million while maintaining supervisory effectiveness by eliminating duplicative, outdated, or low-value data collections.
Key dates
September 2025
- CP21/25 consultation paper published
8 December 2025
- PS27/25 (Policy Statement) published, confirming final policy
31 December 2025
- Proposed implementation date to avoid firms submitting 2025 Q4 data for deleted templates
Suggested considerations
*Cease reporting on the 37 deleted templates effective 31 December 2025
*Update internal systems and processes to remove validation rules and submission workflows for deleted templates
*Revise compliance calendars to reflect aligned FINREP reporting remittance dates
*Review Pillar 3 disclosure obligations to identify any continued requirements based on deleted FINREP templates and assess whether disclosure obligations remain despite template deletion
*Implement rulebook changes reflecting consolidation of FINREP scoping provisions into the PRA Rulebook
What changed
The PRA proposes the following regulatory deletions:
FINREP Template Deletions:
Permanent deletion of 34 whole FINREP reporting templates (approximately one-third of all FINREP collections)
Consolidation of remaining FINREP requirements within a single section of the PRA Rulebook
Clarification of scoping conditions where current provisions are unclear, duplicative, or inconsistently applied
Alignment of reporting remittance dates for FINREP reporting
Other Template Deletions:
CP20/25 is a PRA consultation paper published on 16 September 2025 that proposes targeted updates to the regulatory framework governing third-country insurance branches operating in the UK. The consultation addresses inconsistencies introduced during the Solvency II review, clarifies supervisory expectations, and increases the subsidiarisation threshold—matters that directly affect the operational and compliance costs of non-UK insurers seeking to maintain branch operations rather than establish subsidiaries in the UK market.
Key dates
16 September 2025
- CP20/25 published by the PRA
16 December 2025 Deadline
- Consultation response deadline
H1 2026
- Statement of Policy (SoP) expected to be published; subsidiarisation threshold update anticipated upon SoP publication
31 December 2026
- Planned implementation date for rulebook changes
Suggested considerations
*Threshold Assessment: Larger third-country branches must reassess whether their liabilities, forecast for the coming three years, mean they need to become subsidiaries given the proposed increased subsidiarisation threshold.
*Reporting Requirement Review: Branches should review updated guidance on ORSA submissions to ensure they provide the undertaking-level ORSA (rather than branch-specific ORSA) with required high-level summaries of solvency position, capital buffer rationale, and stress testing results.
*Quantitative Metrics Compliance: Given new quantitative metrics replacing previous PRA firm categorisation, branches should review what requirements will apply to them to ensure they do not inadvertently misreport.
*Three-Year Notification Obligation: Branches should establish processes to notify the PRA where it is projected that they may exceed the subsidiarisation threshold within the next three years.
*Asset Holding Verification: Confirm that branch assets are held in respect of branch provisions and that assets backing direct insurance liabilities are available, as required by the new rule.
What changed
The consultation proposes four primary regulatory modifications:
Subsidiarisation Threshold Increase
The PRA proposes raising the FSCS liability threshold above which third-country branches must establish a UK subsidiary from £500 million to £600 million. The PRA attributes this increase to inflation rather than organic growth, aiming to prevent branches from artificially approaching the current threshold and incurring unnecessary subsidiarisation costs.
ORSA Reporting Clarification
Current guidance will be updated to clarify that third-country branches must submit an Own Risk and Self...
On 1 July, the PRA and the Bank of England held a roundtable meeting with representatives of non-systemic UK banks and building societies.
Why this matters
This roundtable discussion with non-systemic UK banks and building societies is likely focused on prudential requirements, operational resilience, and authorization/licensing issues relevant to these types of firms.