Published on 27 May 2015
The implementation of ring-fencing: legal structure, governance and the continuity of services and facilities – PS10/15
Background
The Prudential Regulation Authority is required under the Financial Services and Markets Act 2000 (as amended by the Financial Services (Banking Reform) Act 2013) to make policy to implement the ring-fencing of core UK financial services and activities.
This policy statement will be of interest to banks which will be required to ring-fence their core activities. This will include banking groups with core deposits greater than £25 billion. It will also be of interest to financial and other institutions and customers who have dealings with ring-fenced bodies.
Content of the policy statement
The policy statement provides feedback on the responses received to Consultation Paper 19/14 published in October 2014, and the amendments to the draft rules and supervisory statements included in CP19/14. The policy statement covers three areas:
i. legal structure arrangements of banking groups subject to ring-fencing;
ii. governance arrangements of ring-fenced bodies; and
iii. arrangements to ensure continuity of services and facilities to ring-fenced bodies.
The PRA does not consider that the responses to the consultation necessitate major changes to its proposed approach to implementing ring-fencing. But the PRA has made a number of amendments to the draft rules and supervisory statements published in CP19/14, mainly to add clarity and certainty. Updated ‘near final’ versions of the rules and supervisory statements are included in the policy statement.
Next steps
The Government has stated its intention for ring-fencing to take effect from 1 January 2019. The PRA intends to undertake a further consultation during 2015, and to publish final rules and supervisory statements covering the policy proposed in these two consultations during 2016 H1, to provide firms with sufficient time for implementation. The PRA’s ‘Structural reform’ webpage summarises development to date and what’s coming up on policy and implementation of the new regimes.
Policy Statement 10/15Published on 6 October 2014
The implementation of ring-fencing: consultation on legal structure, governance and the continuity of services and facilities - CP19/14
Background
The PRA is required under the Financial Services and Markets Act 2000 (as amended by the Financial Services (Banking Reform) Act 2013) to make policy to implement the ring-fencing of core UK financial services and activities.
This consultation paper (CP) is relevant to banks which will be required to ring-fence their core activities. This will include banking groups with core deposits greater than £25 billion. It will also be of interest to financial and other institutions and customers who have dealings with these banks.
The Government has stated its intention for ring-fencing to take effect from 1 January 2019. The PRA intends to undertake further consultations during 2015 and to publish final rules and supervisory statements in 2016 to provide firms with sufficient time for implementation.
Summary of proposals
This CP sets out PRA policy proposals in three areas:
- legal structure arrangements of banking groups subject to ring-fencing;
- governance arrangements of ring-fenced bodies; and
- arrangements to ensure continuity of services and facilities to ring-fenced bodies.
Readers may also wish to refer to Ensuring operational continuity in resolution – DP1/14, Depositor protection – CP20/14, and Policyholder protection – CP21/14 also published on Monday 6 October 2014.
Responses
The consultation closed on Tuesday 6 January 2015.