Published on 14 May 2020
Responses to Occasional Consultation Paper 25/19 – Chapter 5: Retirement interest-only mortgages – PS12/20
Overview
This Prudential Regulation Authority (PRA) Policy Statement (PS) provides feedback to responses to Chapter 5 of Consultation Paper (CP) 25/19 ‘Occasional Consultation Paper – October 2019’. It also contains the PRA’s final policy, as follows:
- update to Supervisory Statement (SS) 11/13 ‘Internal Ratings Based (IRB) approaches’; and
- update to SS10/13 ‘Credit risk – standardised approach’.
This PS is relevant to all banks, building societies and PRA-authorised investment firms offering retirement interest-only (RIO) mortgages. It is also relevant to firms that have offered RIO mortgages in the past, or may do so in the future.
This PS should be read in conjunction with PS11/20 ‘Credit risk: Probability of Default and Loss Given Default estimation’, which also makes an update to SS11/13.
Summary of responses
The PRA received two responses to Chapter 5 of the CP. The respondents generally supported the PRA’s efforts to promote consistency in practice across firms, but raised a number of issues and requested clarification of the proposals. The PRA addresses these points in Chapter 2.
After considering the responses, the PRA has decided to maintain the proposals as consulted, but has provided additional clarification in the updated SS11/13 and SS10/13.
The PRA considers that the changes are not significant, and benefit firms by providing further clarity on the original proposals. The changes would not have a differential impact on mutuals compared to other firms.
Implementation [and next steps]
The policy presented in this PS will take effect on 1 January 2022, in order to align with the proposed implementation date of the relevant European Banking Authority (EBA) guidelines on the definition of default, as set out in PS11/20 ‘Credit risk: Probability of Default and Loss Given Default estimation’.
The policy set out in this PS has been designed in the context of the UK’s withdrawal from the European Union and entry into the transition period, during which time the UK remains subject to European law. The PRA will keep the policy under review to assess whether any changes would be required due to changes in the UK regulatory framework at the end of the transition period, including those arising once any new arrangements with the European Union take effect.
The PRA has assessed that the policy would not need to be amended under the EU (Withdrawal) Act 2018 (EUWA). Please see PS5/19 ‘The Bank of England’s amendments to financial services legislation under the European Union (Withdrawal) Act 2018’ for further details.
Appendices
- Appendix 1: Update to Supervisory Statement SS11/13 ‘Internal Ratings Based (IRB) approaches’
- Appendix 2: Update to Supervisory Statement SS10/13 ‘Credit risk – standardised approach’
Policy statement 12/20
Published on 24 February 2020
Responses to Occasional Consultation Paper 25/19 – Chapters 2 and 3 – PS3/20
Introduction
This Prudential Regulation Authority (PRA) Policy Statement (PS) provides the final policy for Chapters 2 and 3 of Consultation Paper (CP) 25/19 ‘Occasional Consultation Paper – October 2019’ (see page 3 of 3). The PRA received no responses to those chapters of the CP, and has made no changes to the draft policy. However, it is taking the opportunity to update some broken footnote links in the Senior Managers Regime supervisory statements shown in the table below.
The PRA will publish feedback and final policy for Chapter 5 ‘Retirement interest-only mortgages’ of the CP alongside the final policy for CP21/19 ‘Credit risk: Probability of Default and Loss Given Default estimation’ at a later date, as both CPs proposed changes to Supervisory Statement (SS) 11/13 ‘Internal Ratings Based (IRB) approaches’.
This PS provides updates to the following SSs and Statement of Policy (SoP):
|
CP 25/19 chapter |
SS/SoP |
Appendix |
|---|---|---|
|
2. Removing references to London Interbank Offered Rate (LIBOR) |
SS20/15 ‘Supervising building societies’ treasury and lending activities’ |
1 |
|
SoP ‘The PRA’s methodologies for setting Pillar 2 capital’ |
2 |
|
|
3. Senior Managers regime – updating references and corrections |
SS28/15 ‘Strengthening individual accountability in banking’ |
3 |
|
SS35/15 ‘Strengthening individual accountability in insurance’ |
4 |
This PS is relevant to UK banks, building societies, credit unions, PRA-designated investment firms, UK Solvency II insurance firms, third country insurance branches within the scope of the PRA’s rules transposing the Solvency II Directive, and the Society of Lloyd's and managing agents.
Background
In Chapters 2 and 3 of the CP, the PRA proposed to:
- remove references to LIBOR in SS20/15 and the SoP (Chapter 2); and
- make minor corrections and update redundant references to SS28/15 and SS35/15.
The PRA has already published the final policy for Chapter 4 of the CP in PS27/19 ‘Responses to Occasional Consultation Paper 25/19 – Chapter 4: Reporting updates for Capital+ and ring-fenced bodies’ (see page 2 of 3).
Implementation
The policy presented in this PS will take effect from the date of publication, Monday 24 February 2020.
The policy set out in this PS has been designed in the context of the UK’s withdrawal from the European Union and entry into the transition period, during which time the UK remains subject to European law. The PRA will keep the policy under review to assess whether any changes would be required due to changes in the UK regulatory framework at the end of the transition period, including those arising once any new arrangements with the European Union take effect.
The PRA has assessed that the proposals would not need to be amended under the EU (Withdrawal) Act 2018 (EUWA) at the end of the transition period. Please see PS5/19 ‘The Bank of England’s amendments to financial services legislation under the European Union (Withdrawal) Act 2018’ for further details.
Appendices
- Appendix 1: SS20/15 ‘Supervising building societies’ treasury and lending activities’
- Appendix 2: SoP ‘The PRA’s methodologies for setting Pillar 2 capital’
- Appendix 3: SS28/15 ‘Strengthening individual accountability in banking’
- Appendix 4: SS35/15 ‘Strengthening individual accountability in insurance’
Published on 19 December 2019
Responses to Occasional Consultation Paper 25/19 – Chapter 4: Reporting updates for Capital+ and ring-fenced bodies’ - PS27/19
Overview
This Prudential Regulation Authority (PRA) Policy Statement (PS) provides the PRA’s final rules amending the Regulatory Reporting Part of the PRA Rulebook and reporting templates PRA101, PRA102, RFB003, RFB004 and RFB008, following Chapter 4 of Consultation Paper (CP)25/19 ‘Occasional Consultation Paper – October 2019’. The PRA received no responses to the consultation and will be making the policy as proposed in the CP.
The PRA will also be updating links to the templates in the appendices to Supervisory Statement (SS) 34/15 ‘Guidelines for completing regulatory reports’.
This PS is relevant to UK banks, building societies and PRA-designated investment firms, referred to collectively as ‘firms’.
In CP25/19 the PRA proposed to make minor updates and corrections to certain Capital+ and ring-fenced body reporting templates to align their presentation to the final amendments to Financial Reporting (FINREP) and Common Reporting (COREP) templates.
Implementation
The policy presented in this PS will take effect on Wednesday 1 March 2020 for the PRA101 and PRA102 templates, and Monday 1 June 2020 for the RFB003, RFB004 and RFB008 templates.
Please note that version 3.3.0 of the Bank of England Banking XBRL taxonomy, published on Thursday 28 November, contains minor presentational differences to the templates published in this policy statement. These differences will be corrected in a future taxonomy update.
The policy set out in this PS has been designed in the context of the current UK and EU regulatory framework. The PRA will keep the policy under review to assess whether any changes would be required due to changes in the UK regulatory framework, including those arising once any new arrangements with the European Union take effect.
In the event that the UK leaves the EU with no implementation period in place, the PRA has assessed that the policy would not need to be amended under the EU (Withdrawal) Act 2018 (EUWA). Please see PS5/19 ‘The Bank of England’s amendments to financial services legislation under the European Union (Withdrawal) Act 2018’ for further details.
The final SS attached to this PS should be read in conjunction with SS1/19 ‘Non-binding PRA materials: The PRA’s approach after the UK’s withdrawal from the EU’.
As the policy relates to reporting it should be read in conjunction with SS2/19 ‘PRA approach to interpreting reporting and disclosure requirements and regulatory transactions forms after the UK’s withdrawal from the EU’.
Appendices
- PRA RULEBOOK: CRR FIRMS: REGULATORY REPORTING (RING FENCE BODIES, CAPITAL+ AND FINREP) AMENDMENT INSTRUMENT (NO. 2) 2019 (pdf)
- Supervisory Statement (SS) 34/15 ‘Guidelines for completing regulatory reports’
- PRA101, PRA102, RFB003 , RFB004 and RFB008 templates: available at the Regulatory Reporting – banking sector, Banks, building societies and investment firms page
Note: All content for this PS is included on this webpage. If you would like a PDF version of the PS, please use the ‘Convert to PDF’ button available below.
Published on 07 October 2019
Occasional Consultation Paper - October 2019
Overview
This Consultation Paper (CP) proposes minor amendments to Prudential Regulation Authority (PRA) Rulebook Parts, supervisory statements (SSs), statements of policy (SoPs) and the relevant templates.
The chapters in this CP are relevant to different firms, as follows:
- Chapters 2 and 5 - all firms to which CRD IV applies, and Chapter 2 additionally to building societies;
- Chapter 3 - UK banks, building societies, credit unions, PRA-designated investment firms, UK Solvency II insurance firms, third country insurance branches within the scope of the PRA’s rules transposing the Solvency II Directive, and the Society of Lloyd's and managing agents; and
- Chapter 4 – Reporting updates; UK banks, building societies and PRA-designated investment firms.
The chapters contained in this CP, the Rulebook Parts, SSs, SoP, and relevant templates they propose to change, and the appendices containing the draft policy, are listed in the table below.
|
CP 25/19 chapter |
Rulebook Part/SS/SoP/Template |
Appendix |
|---|---|---|
|
2. Removing references to LIBOR |
SS20/15 ‘Supervising building societies’ treasury and lending activities’ |
1 |
|
SoP ‘The PRA’s methodologies for setting Pillar 2 capital’ |
2 |
|
|
3. Senior Managers regime – updating references and corrections |
SS28/15 ‘Strengthening individual accountability in banking’ |
3 |
|
SS35/15 ‘Strengthening individual accountability in insurance’ |
4 |
|
|
4. Reporting updates for Capital+ and Ring‑fenced bodies |
Regulatory Reporting Part of the PRA Rulebook |
5 |
|
Templates PRA101, PRA102, RFB003, RFB004 and RFB008. |
6 |
|
|
5. Retirement interest-only mortgages |
SS11/13 ‘Internal Ratings Based (IRB) approaches’ |
7 |
|
SS10/13 ‘Standardised approach’ |
8 |
Implementation
Subject to the PRA’s consideration of the responses to the consultation, the proposed implementation dates are:
- on the same date as publication of the final policy for Chapters 2 and 3;
- as set out in Appendix 5 for Chapter 4.
For Chapter 5, the PRA proposes that firms should implement the proposed changes by Tuesday 31 December 2020, in order to align with the proposed implementation date of the relevant European Banking Authority (EBA) guidelines, as set out in CP21/19 ‘Credit risk: Probability of Default and Loss Given Default estimation’.
Responses and next steps
The consultation period for Chapter 4 of this CP closed on Monday 18 November 2019. This would allow the PRA to make the proposed changes to the templates and allow firms time to implement them before they would take effect on Sunday 1 March 2020 and Monday 1 June 2020 (see Appendix 5).
The consultation period for the remaining chapters closed on Monday 9 December 2019.
The PRA invites feedback on the proposals set out in this consultation. Please address any comments or enquiries to OCP.responses@bankofengland.co.uk .
The proposals set out in this CP have been designed in the context of the current UK and EU regulatory framework. The PRA will keep the policy under review to assess whether any changes would be required due to changes in the UK regulatory framework, including those arising once any new arrangements with the European Union take effect. Each chapter in this CP sets out the PRA’s assessment of whether the proposals would need to be amended under the European Union (Withdrawal) Act 2018 (EUWA). Please see Policy Statement (PS) 5/19 ‘The Bank of England’s amendments to financial services legislation under the EUWA’ for further details.