PRA-Treasury tensions emerge over reform scope

Under the current framework, the Bank of England and the PRA must submit this report to Parliament annually if they exercise the relevant sub‑delegated powers, creating a recurring point of scrutiny for their post‑Brexit rule‑making.

PRA sets out its own agenda

Against this backdrop, Sam Woods used a speech titled “Prudentist” on 22 September to outline the PRA’s future work programme. In that speech, Woods stated that the capital and liquidity of banks and insurers are strong despite the impact of Covid, providing the prudential backdrop for the next phase of reforms.

The “Prudentist” remarks link the PRA’s planned agenda to its assessment of current resilience, indicating that any recalibration of rules will start from a position of balance sheet strength across both banking and insurance sectors.

New consultation on domestic liquidity groups

The PRA moved quickly to put parts of this agenda into practice, publishing Consultation Paper CP19/21 on 28 September. CP19/21 sets out proposed rules on how prudential liquidity requirements should apply to Domestic Liquidity Sub‑Groups, or DoLSubs.

The consultation opens a technical front in the wider debate over how much flexibility the PRA should have in tailoring post‑EU liquidity standards within UK banking groups.

Context

The cluster of documents and statements in September 2021 – Bailey’s remit letter, the Treasury’s sub‑delegation report, Woods’ “Prudentist” speech and CP19/21 – shows both sides of the evolving settlement between the Government and the PRA over post‑Brexit prudential regulation. The period captures the Government’s push for accountability on delegated powers and the PRA’s effort to define its own priorities on capital and liquidity for banks and insurers.