UK PRA Sets Out Strategic Priorities

In her first Mansion House speech as CEO of the UK Prudential Regulation Authority (PRA) last week, Katharine Braddick set out plans for a new five-year strategy centered on resilience, growth, innovation, and transparency.

Braddick said the PRA will increase its focus on operational and cyber resilience alongside traditional financial resilience. A new directorate reporting directly to her will act as a center of excellence for operational and cyber resilience, while the PRA and Financial Conduct Authority plan to consult by year-end on a new supervisory statement clarifying expectations for firms. She stressed that firms must invest not only in preventing disruption, but also in their ability to respond and recover when severe incidents occur.

On growth, the PRA plans to further develop how it applies its secondary competitiveness and growth objective, including how regulation affects investment, capital availability, and the pricing of financial services. Braddick said the framework will be embedded in day-to-day regulatory decision-making and used to assess the PRA’s contribution to UK growth and international competitiveness. She also pointed to reforms to the Senior Managers and Certification Regime and proposals to index regulatory thresholds to nominal economic growth.

The PRA also intends to expand its use of data analytics and technology, reduce unnecessary or ad hoc data collections, and make its rulebook, supervisory guidance, and communications easier for firms to navigate. Braddick linked this modernization effort to more timely identification of emerging risks and more efficient interaction between firms and supervisors.

In order to be more transparent, the PRA plans to provide firms and Parliament with clearer information about its priorities and operational performance. “That will provide the means for us to be held accountable for meeting our commitments and demonstrate that we are a listening and learning organisation,” Braddick said. The regulator will also review parts of its mortgage internal-model framework and subject proposed reforms to independent industry and regulatory challenge.

“The delivery of our strategy will rely on the considerable strengths that characterise the PRA: our deeply expert and purpose-driven people; our comprehensive knowledge of the firms we regulate; and our established approach to supervision – judgement-led, forward-looking and focussed on key risks to safety and soundness,” Braddick said. “That work has underpinned the success of the PRA’s first twelve years and must never be taken for granted.”