PRA outlines approach to Temporary Permissions Regime
The Prudential Regulation Authority has set out how it is handling authorisation decisions for European Economic Area banks and insurers operating in the UK under the post‑Brexit Temporary Permissions Regime in 2020. The approach clarifies how long firms can rely on temporary permissions, when they might apply for full authorisation, and how the PRA is sequencing decisions across the extended processing window.
The Temporary Permissions Regime came into effect after the end of the transition period on 31 December 2020, providing a legal route for EEA firms to continue UK‑regulated activities while they seek full authorisation. During the regime, a TP firm is given permission to carry on regulated activities, rather than having to cease business or rely solely on run‑off arrangements.
Authorisation timetable and PRA processing window
What the regulator said
The PRA has an extended time period to process authorisation applications from EEA banks and insurers in the TPR, currently up to the end of 2023. Within this window, the PRA expects to take authorisation decisions on a case‑by‑case basis, dependent on PRA resourcing and governance processes rather than a fixed sequence by firm type or size. The PRA states that the timing of authorisation should not be taken as an indication of its view of risks at individual institutions, separating operational sequencing from supervisory risk assessments.
Some firms in the TPR may choose not to apply for authorisation until the end of 2022, or otherwise as the PRA may direct, meaning applications will arrive unevenly across the regime's life. This flexibility on when to apply interacts with the PRA's extended processing period, allowing the regulator to manage workflow and governance while firms continue to operate under temporary permissions.
Permissions during the regime
Scope and affected firms
During the TPR, firms benefit from permission to carry on regulated activities in the UK while their longer‑term authorisation status is determined. This structure allows EEA banks and insurers that entered the regime to maintain existing UK business within the three‑year maximum duration set out for the TPR, subject to meeting PRA and FCA requirements.
The PRA's clarification that authorisation timing does not represent a risk signal is intended to separate the operational mechanics of the regime from market perceptions of individual firms. Case‑by‑case decision‑making, anchored in PRA resourcing and governance, means that firms authorised earlier or later within the window are not, by that fact alone, being ranked in prudential terms. The FCA had set landing slots for different cohorts of firms to engage with the full authorisation process. The slots were expected to run from October to December 2019 for the first cohort. The final cohort slots were scheduled from January to March 2021.
These landing slots structured when firms were expected to submit applications, while the PRA's extended processing period to the end of 2023 defines how long the prudential regulator can take to reach decisions on those applications. The combination of FCA‑set application windows and PRA‑managed processing timelines frames how EEA firms transition from temporary permissions to full UK authorisation or alternative outcomes. These consultations were expected to include the level of fees to be paid by firms in the TPR, clarifying the cost of operating under temporary permissions alongside the evolving prudential and conduct requirements. Further detail on Handbook and Rulebook changes, including fees, was expected to be set out through joint PRA and FCA consultation, rather than through ad hoc supervisory communications.
--- Sources: https://www.bankofengland.co.uk/prudential-regulation https://www.bankofengland.co.uk/prudential-regulation/publication/2021/june/firm-authorisations-under-the-tpr-regime https://www.penningtonslaw.com/insights/brexit-and-financial-services-the-temporary-permissions-regime-and-financial-services-contracts-regime/
