PRA Regulatory Digest – October 2026
AI Analysis
The PRA’s October 2026 digest highlights a final policy removing the firm-specific 15% cap on high loan-to-income mortgage lending, alongside consultations proposing major changes to SM&CR and automatic indexation of regulatory thresholds. The high-LTI rules took effect on 28 October 2026; the SM&CR and threshold-indexation proposals are not yet final, but could materially change governance burdens, proportionality thresholds and regulatory perimeter assessments.
Key dates
- 2026-10-07
- PRA published CP13/26 proposing automatic indexation of in-scope regulatory thresholds every five years, with a proposed first update on 1 July 2031.
- 2026-10-14
- PRA published PS19/26 setting out the final policy on high loan-to-income lending.
- 2026-10-22
- PRA published CP14/26 consultation on phase 2 of SM&CR reform.
- 2026-10-26
- Bank of England and FCA published the 2026 survey results on artificial intelligence and machine learning in UK financial services.
- 2026-10-28
- PRA rules and supervisory statement on high-LTI lending commenced; the firm-specific 15% cap was removed and the revised monitoring and governance framework became effective.
- 2027-01-22 Deadline
- Consultation deadline reported for the PRA and FCA phase 2 SM&CR consultations.
- 2027-02-07 Deadline
- Consultation deadline for CP13/26 and the associated discussion of additional thresholds potentially suitable for indexation.
- 2031-07-01
- Proposed date for the first automatic update of in-scope regulatory thresholds under CP13/26, subject to final policy and implementation.
Suggested considerations
- Mortgage lenders should assess their high-LTI lending strategy against risk appetite, capital and credit-risk tolerances now that the firm-specific 15% cap has been removed.
- Mortgage lenders should establish or validate rolling four-quarter calculations for individual high-LTI flows and retain evidence supporting any adjustments, limits or risk appetite decisions.
- Relevant firms should review governance, underwriting, affordability, concentration and stress-testing controls to demonstrate prudent management of high-LTI lending under the new PRA expectations.
- Compliance and regulatory-reporting teams should monitor the PRA’s quarterly aggregate high-LTI publications and assess whether lending plans remain consistent with the FPC’s aggregate 15% limit.
- PRA-regulated firms should map current Rulebook and supervisory-statement thresholds against the 128 proposed in-scope thresholds and identify systems, permissions, reporting and policy documents that would require future updates.
- Affected firms should consider submitting responses to CP13/26 and its associated discussion questions by 7 February 2027, particularly where indexation could alter regulatory categorisation, reporting, capital, liquidity, governance or investment-flexibility requirements.
- SM&CR compliance teams should assess CP14/26 against current senior-manager responsibilities, certification processes, fitness and propriety controls, governance maps, handover arrangements and recordkeeping, while treating the proposals as non-final.
- Firms should monitor the related FCA SM&CR consultation and coordinate any response because implementation may require changes across PRA and FCA regimes.
What changed
PS19/26 removes the firm-specific 15% limit on high-LTI mortgage lending, while retaining the Financial Policy Committee’s aggregate 15% limit as the benchmark for overall market lending. Firms’ individual high-LTI flows and any required adjustments will be assessed on a rolling four-quarter basis, whereas aggregate high-LTI lending will continue to be monitored quarterly. The final rules and supervisory statement also introduce governance and risk-management expectations, and the PRA intends to publish aggregate high-LTI flow data quarterly. CP13/26 proposes automatic five-year indexation of 128 fixed nominal regulatory thresholds using UK nominal GDP growth, with a 2026 base year, a proposed first adjustment on 1 July 2031, and updated values rounded to two significant figures; the propo
Compliance impact
PS19/26 is immediately relevant and creates a significant control and governance impact for mortgage lenders: greater lending flexibility is paired with continuing aggregate constraint, rolling-flow monitoring and explicit prudential expectations. CP13/26 and CP14/26 are not binding yet, but could reduce compliance burdens for some firms while changing regulatory categorisation, reporting and seni
Who is affected
Related regulations
References
AI-generated analysis. May contain errors or omissions — verify with the original PRA source before acting. Full disclaimer.
What the PRA said
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.
Published by PRA . Read the full notice at the source for the authoritative text.