Prudential Regulation Authority
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The Prudential Regulation Authority (PRA) is a regulatory body in the UK responsible for the prudential regulation and supervision of banks, building societies, credit unions, insurers, and major investment firms. It operates as a subsidiary of the Bank of England and works alongside the Financial Conduct Authority to regulate the financial services industry.
Prudential regulation: The PRA's primary objective is to promote the safety and soundness of financial institutions. It sets and enforces prudential standards, including capital adequacy requirements, liquidity requirements, risk management standards, and stress testing, to ensure that regulated firms have sufficient financial resources to withstand economic and financial shocks.
Authorisation and supervision: The PRA is responsible for authorising and supervising financial institutions to ensure they meet the required prudential standards. It assesses the fitness and propriety of individuals holding key positions within these institutions and monitors their ongoing compliance with regulatory requirements.
Financial stability: The PRA contributes to the overall financial stability in the UK by monitoring systemic risks and taking actions to address potential threats to the stability of the financial system. It works closely with other regulatory bodies, such as the Financial Policy Committee and the Financial Stability Board, to identify and mitigate systemic risks.
Resolution and recovery planning: The PRA plays a crucial role in the resolution and recovery planning of financial institutions. It works to ensure that banks and other regulated firms have adequate plans in place to manage their failure without causing disruption to the financial system. The PRA also has powers to take action in cases of an institution's failure, such as initiating the resolution process or facilitating an orderly wind-down.
International engagement: The PRA actively participates in international forums and collaborates with global regulatory bodies to promote consistent prudential standards and contribute to the stability of the international financial system. It represents the UK's interests and contributes to the development of global prudential regulations and supervisory practices.
The PRA operates within the legal framework established by the Financial Services and Markets Act 2000 and works alongside the Financial Conduct Authority to regulate and supervise the financial services industry in the UK. Its role is essential in maintaining the safety, stability, and resilience of financial institutions and the overall financial system.
Prudential regulation: The PRA's primary objective is to promote the safety and soundness of financial institutions. It sets and enforces prudential standards, including capital adequacy requirements, liquidity requirements, risk management standards, and stress testing, to ensure that regulated firms have sufficient financial resources to withstand economic and financial shocks.
Authorisation and supervision: The PRA is responsible for authorising and supervising financial institutions to ensure they meet the required prudential standards. It assesses the fitness and propriety of individuals holding key positions within these institutions and monitors their ongoing compliance with regulatory requirements.
Financial stability: The PRA contributes to the overall financial stability in the UK by monitoring systemic risks and taking actions to address potential threats to the stability of the financial system. It works closely with other regulatory bodies, such as the Financial Policy Committee and the Financial Stability Board, to identify and mitigate systemic risks.
Resolution and recovery planning: The PRA plays a crucial role in the resolution and recovery planning of financial institutions. It works to ensure that banks and other regulated firms have adequate plans in place to manage their failure without causing disruption to the financial system. The PRA also has powers to take action in cases of an institution's failure, such as initiating the resolution process or facilitating an orderly wind-down.
International engagement: The PRA actively participates in international forums and collaborates with global regulatory bodies to promote consistent prudential standards and contribute to the stability of the international financial system. It represents the UK's interests and contributes to the development of global prudential regulations and supervisory practices.
The PRA operates within the legal framework established by the Financial Services and Markets Act 2000 and works alongside the Financial Conduct Authority to regulate and supervise the financial services industry in the UK. Its role is essential in maintaining the safety, stability, and resilience of financial institutions and the overall financial system.
