Following on from the publication of PRA consultations and policy statements on the implementation of EU and Basel requirements relating to holding companies (including those within PRA CP17/20, PS26/20, PS29/20 and PRA CP5/21), the PRA has published a further consultation (CP12/21) which sets out:
- proposed changes to PRA rules in respect of the application of existing consolidated prudential requirements to financial holding companies (FHCs) and mixed financial holding companies (MFHCs) that have been approved or designated in accordance with Part 12B of the Financial Services and Markets Act 2000 (FSMA), reflecting the transition to placing direct responsibility on holding companies for compliance with consolidated requirements; and
- proposed guidance with respect to directions and penalties over holding companies under Part 12B FSMA.
The PRA considers that the consequential amendments to the PRA Rulebook do not amount to substantive changes in PRA-regulated groups' prudential requirements. However, the holding company approval regime will affect the balance of responsibilities within PRA regulated groups and the related PRA supervisory practices, including with respect to enforcement. CP12/21 provides a timely reminder to firms within affected groups of the new PRA consolidated prudential framework, as well as a reminder to relevant holding companies to apply for approval or exemption from the PRA by 28 June 2021. The PRA expects to receive applications for approval or exemption from approval from around 60 holding companies.
The Financial Services Act 2021 also sets out comparable new requirements for approval of, and imposition of penalties upon, holding companies of FCA-regulated groups that are subject to consolidated supervision under the forthcoming Investment Firms Prudential Regime, which will apply from 1 January 2022. The imposition of responsibilities at holding company level will be a more fundamental change for FCA regulated groups and their holding companies than for PRA-regulated groups. The FCA has yet to publish detailed requirements in this area but is expected to do so during H2 2021.
| CP12/21 | |
| Scope | CP12/21 is relevant to FHCs, MFHCs, and banks and PRA-designated investment firms that are part of a UK consolidation group controlled by a UK parent FHC or UK parent MFHC. |
| Background | The current approach to the application of consolidated prudential requirements will be changing.
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| Proposals |
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| Timing and next steps | |
| 28 June 2021 | Relevant holding companies must apply for approval or exemption from the PRA by this date |
| 22 July 2021 | CP12/21 - Consultation closes |
| 15 September 2021 | Proposed changes (except the notification requirement in the Groups Part – see below) in CP12/21 expected to apply |
| 1 January 2022 | Requirement relating to the notification of the exclusion of a subsidiary from the consolidation group in the Groups Part expected to apply |
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