PRA Guidance

Key dates

2026-10-14

PRA publishes SS2/26 – High loan to income lending. The statement sets out supervisory expectations and the quarterly aggregate-monitoring framework.

Suggested considerations

• Firms should determine whether they were below the de minimis threshold in both relevant consecutive four-quarter periods, using both the £150 million total-credit and 300-contract tests.
• Mortgage risk and compliance teams may wish to validate the firm’s classification of high-LTI contracts at the 4.5-times income threshold and confirm that excluded products are correctly removed from internal and regulatory monitoring.
• Boards and senior management may wish to approve explicit high-LTI risk appetite limits and management information covering current flow, forecast flow, concentrations, high-risk segments, arrears and performance outcomes.
• Firms considering a strategy that would increase high-LTI flow above 15% should prepare evidence of the supporting risk-management changes and discuss them through regular PRA supervisory engagement.
• Firms above the de minimis threshold should establish controls to reconcile internal high-LTI flow data with FCA Product Sales Data and the PRA’s quarterly aggregate publication, including a process for handling revised data.
• Mortgage lenders should maintain credible scenario plans for reducing future high-LTI originations, including underwriting, product, pricing, distribution and pipeline controls, while distinguishing future lending decisions from existing approved offers.
• Groups should document whether high-LTI governance and monitoring are operated at individual-firm or group level and ensure that group-level calculations include only relevant firms above the de minimis threshold.
• Compliance teams may wish to monitor future PRA and FCA announcements for any fractional reduction rate, implementation timetable or withdrawal of adjustment expectations, since SS2/26 does not prescribe a permanent reduction rate in advance.

What changed

SS2/26 defines high-LTI lending as regulated mortgage contracts where credit is at least 4.5 times the relevant individual or joint income. It applies to firms within the Housing Part of the PRA Rulebook, including relevant UK subsidiaries, and requires high-LTI lending to be conducted prudently under an appropriate risk-management and compensating-controls framework.

Key dates

Second half of 2017

- Proposed implementation date for superseding SS18/13 (achieved with December 2017 publication)

21 September 2017 Deadline

- PRA consultation deadline for CP9/17 (the consultation paper preceding this statement)

11 December 2017

- SS9/17 first published and became effective

Ongoing Deadline

- Firms must maintain and test recovery plans continuously; the PRA notes this statement "may be revised as recovery planning becomes further embedded in firms' risk management practices"

Suggested considerations

• *Develop comprehensive recovery plans containing all minimum elements specified in the Recovery Planning Part of the PRA Rulebook and detailed in SS9/17
• *Establish governance frameworks documenting how recovery plans are produced, reviewed, approved by the board, and how recovery options would be implemented
• *Conduct fire drill exercises that simulate recovery scenarios, test governance arrangements, and validate management information capabilities
• *Create implementation playbooks (for complex plans) that enable rapid execution by senior management during stress
• *Perform detailed impact analysis for each recovery option, quantifying capital and liquidity impacts with realistic timelines

What changed

SS9/17 introduced several material enhancements to recovery planning requirements: Governance and Integration: Recovery planning must be embedded within firms' risk management frameworks, with board-level oversight and integration with stress testing and ICAAP processes. The PRA expects clear governance documentation showing how plans are produced, reviewed, signed off, and implemented. Fire Drill Exercises: Firms must conduct regular fire drill exercises that simulate recovery scenarios in a live environment, testing governance arrangements, management information systems, and the...

Key dates

18 March 2026

- Publication date of SS1/26

18 March 2027 Deadline

- Effective date; firms must comply with reporting requirements

Within 24 hours

- Expected submission of initial phase report after determining threshold met (as soon as practicable)

Each significant change

- Intermediate phase update(s), including at resolution

Within 30 working days of resolution

- Final phase report (extendable to 60 working days if impracticable)

Suggested considerations

• Assess incidents against PRA thresholds (e.g., risk to stability/soundness/policyholders, considering contagion, disruptions > thresholds, data loss, media impact); report if met, even if internally high-priority.
• Submit phased reports using specified fields: Initial (basic details promptly); Intermediate (updates on changes like impact, strategy shifts, resolution); Final (full details post-resolution).
• Maintain processes for prompt classification, data gathering, and submission while prioritizing resolution; continue ad-hoc supervisory notifications if needed.
• Review internal policies to align severity ratings with PRA thresholds; document assessments.
• For critical third-party (CTP) incidents, both firms and CTPs report uniquely.

What changed

• - Introduces clear reporting thresholds in Regulatory Reporting Rule 24.2: Firms must report if an incident poses risks to UK financial stability, firm safety/soundness, or (for insurers)...
• Mandates a phased reporting approach (Rule 24.1-24.4): Initial report as soon as practicable (expected within 24 hours of threshold determination); intermediate updates for significant changes (e.g.,...
• Excludes near-misses (potential events without disruption/data loss to external users); aligns with but does not replace Fundamental Rule 7 or Notification Part Chapter 2 obligations.
• Specifies reporting via a "Reporting Fields Document"; firms balance reporting with incident resolution.

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...

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).
• Embed climate risks in governance: Define risk appetite, update SM&CR responsibilities, ensure board MI/challenge.
• 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.

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

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...

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.
• Climate integration: Improve risk identification, quantitative analysis, data/modelling, oversight; align governance with SS1/23.

What changed

• 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...