The implementation of ring-fencing: reporting and residual matters – responses to CP25/16 and Chapter 5 of CP36/16

Overview

This Prudential Regulation Authority (PRA) policy statement (PS) provides feedback on responses received to Consultation Paper (CP) 25/16 ‘The implementation of ring-fencing: reporting and residual matters’. It also provides feedback on responses received to Chapter 5 ‘Ring-fencing – consequential and reporting amendments’ of CP36/16 ‘Occasional Consultation Paper’.

This PS is relevant to those banking groups that will be required by the Financial Services and Markets Act 2000 (FSMA) as amended by the Financial Services (Banking Reform) Act 2013 (the Banking Reform Act) to ring-fence their ‘core activities’. This includes both those groups which currently have ‘core’ deposits – broadly those deposits from individuals and small businesses – in excess of £25 billion and those groups which expect to exceed this threshold by 1 January 2019. This PS will also be relevant to banks and banking groups which may approach this threshold over time. This PS will be of interest to financial and other institutions, and customers who have dealings with these banking groups. It should be read alongside the Ring-fenced Bodies Part and the Regulatory Reporting Part of the PRA Rulebook.

The appendices to this PS set out the final rules (see Appendix 1) and supporting policy documents (see Appendices 2-6) to implement the proposals consulted on in CP25/16. The relevant appendices items (1, 2 and 6) include links to final reporting templates and instructions. 

Feedback on consultation responses

The PRA received seven responses to CP25/16. Overall, the PRA does not consider that the responses received necessitate significant changes to its proposals. The PRA has, however, made minor amendments to the proposed rules and supervisory statements consulted on in CP25/16 in light of the feedback received and to add further clarity. Each chapter of this PS describes the most important issues raised by respondents and notes the main areas where the PRA has made amendments in the rules and supporting policy documents.

In July 2016 HM Treasury made a number of amendments to the ring-fencing secondary legislation. As a result of these amendments, the PRA identified a need for consequential changes to the PRA’s ring-fencing regime, including to the reporting requirements proposed in CP25/16. The PRA consulted on these changes in Chapter 5 of CP36/16. CP36/16 closed on 12 December 2016 and the PRA received three responses. These responses are discussed in Chapters 4 and 5 of this PS. The PRA has incorporated the amendments proposed in Chapter 5 of CP36/16 into the final rules and reporting templates published in the appendices to this PS.

For the latest updates, background, information on implementation and policy development see the dedicated ‘Structural reform’ webpage.

Policy Statement 3/17

Appendices

1. PRA RULEBOOK: CRR FIRMS AND NON-AUTHORISED PERSONS: RING-FENCING INSTRUMENT 2017
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2. Supervisory Statement 34/15 UPDATE
3. Supervisory Statement 8/16 UPDATE
4. Supervisory Statement 31/15 UPDATE
5. Statement of Policy
6. Pillar 2 reporting, including instructions for completing data items FSA071 to FSA082 – SS32/15 UPDATE
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