Published on 28 May 2021
Operational continuity in resolution: Updates to the policy -PS9/21
Overview
This Prudential Regulation Authority (PRA) Policy Statement (PS) provides feedback to responses to Consultation Paper (CP) 20/20 ‘Operational continuity in resolution: Updates to the policy’ (page 2 of 2). It also contains the PRA’s final policy, as follows:
- amendments to the Operational Continuity Part of the PRA Rulebook (the rules) (Appendix 1); and
- a new Supervisory Statement (SS) 4/21 ‘Ensuring operational continuity in resolution’, which will supersede SS9/16 (Appendix 2).
This PS is relevant to PRA-authorised UK banks, building societies, and PRA-designated UK investment firms currently in scope of, or likely to come into scope of, the rules (firms). The PRA is amending the definition of critical services as a result of CP20/20. For a firm to be in scope of the rules, it must receive critical services supporting critical functions, and must meet one of the three thresholds set out in Operational Continuity 1.1. The rules apply to all firms that pose risks to financial stability, particularly those for which the Bank of England (Bank) has set bail-in or partial-transfer as their preferred resolution strategies.
Summary of responses
The PRA received eight responses to CP20/20. Respondents broadly recognised the rationale behind the proposal to expand the scope of those services that the PRA considers should be able to continue throughout resolution. Generally, the comments focused on the implementation timeline, the definition of the proposed new term ‘essential services’ in relation to other PRA policies, ownership of financial resources for intra-group critical or essential services, and application to groups. More detail covering all CP responses is set out under the relevant sections in Chapter 2.
Implementation
The amended Operational Continuity Part will be effective from Sunday 1 January 2023.
SS4/21 will be effective from Sunday 1 January 2023. Until then, SS9/16 will remain in place.
The proposals set out in this PS have been designed in the context of the UK having left the European Union and the transition period having come to an end. Unless otherwise stated, any references to EU or EU derived legislation refer to the version of that legislation which forms part of retained EU 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.
Policy Statement 9/21 Appendix
- Appendix 1: PRA RULEBOOK: CRR FIRMS: OPERATIONAL CONTINUITY INSTRUMENT 2021 (pdf)
- Appendix 2: SS4/21 ‘Ensuring operational continuity in resolution’
Published on 28 October 2020
Operational continuity in resolution: Updates to the policy - CP20/20
Overview
In this Consultation Paper (CP), the Prudential Regulation Authority (PRA) sets out its proposals to revise its operational continuity in resolution (OCIR) policy. The purpose of the proposals is to improve firms’ resolvability and support the Bank of England’s approach to resolution as set out in the Statement of Policy ‘The Bank of England’s approach to assessing resolvability’. The proposals would make amendments to the Operational Continuity Part of the PRA Rulebook (Rules) (see Appendix 1) and PRA OCIR expectations, and would result in a new Supervisory Statement (SS) on OCIR (Appendix 2). The new SS would supersede SS9/16 ‘Ensuring operational continuity in resolution’.
This CP is relevant to PRA-authorised UK banks, building societies, and PRA-designated UK investment firms currently in scope of, or likely to come into scope of, the Rules. For a firm to be in scope of the Rules, it must receive critical services, and must meet one of the three thresholds set out in Operational Continuity 1.1.
Implementation
The PRA proposes that the changes resulting from this CP would take effect from Saturday 1 January 2022.
The PRA intends to publish its final policy relating to OCIR in H1 2021. Many firms' existing OCIR arrangements may already be consistent with some of these proposals. The PRA would therefore expect that firms would be able to leverage their existing OCIR arrangements when considering the extent to which further work may be necessary ahead of Saturday 1 January 2022.
Responses and next steps
This consultation closes on Sunday 31 January 2021. The PRA invites feedback on the proposals set out in this consultation. Responses to this CP, CP19/20 and the Bank’s CP ‘Updates to the Bank of England’s approach to assessing resolvability’ may be included in a single response to RAF_OCIR_consultations_2020@bankofengland.co.uk.
- Appendix 1: Draft Supervisory Statement: ‘Ensuring operational continuity in resolution’ (pdf)
- Appendix 2: Draft Operational Continuity rule instrument (pdf)