Katharine Braddick has set out four priorities for the Prudential Regulation Authority (PRA), including a stronger focus on operational and cyber resilience, as she outlined the direction she intends to take the UK banking and insurance regulator. Her first five-year strategy is due to be published next year; it has not yet been issued.
Speaking at the City Regulators’ Dinner at Mansion House in London on Thursday, 22 October, the PRA chief executive said the priorities would be resilience, growth, innovation and transparency. The speech was her first major address in the role. Braddick became chief executive around four months earlier.
Resilience remains central
The PRA intends to establish a dedicated supervisory directorate for operational and cyber resilience. It is planned to report directly to Braddick and act as a centre of expertise within the regulator. The authority also intends to increase its attention to firms’ ability to withstand and respond to operational disruption and cyber threats.
The planned directorate is an organisational change still to come, not a new resilience rule already in force. Its proposed remit reflects the PRA’s view that resilience of the UK’s banking and insurance sectors remains fundamental. The speech did not announce a completed rulebook change or a new compliance deadline for firms.
Strategy planned for next year
The first five-year PRA strategy is intended to explain how the authority will pursue the four priorities. On growth, Braddick said the regulator would develop its approach to competitiveness and examine how regulation affects investment, the availability of capital and the pricing of financial services. The aim is to make clearer how those considerations are embedded in day-to-day decisions and how their effects will be tracked.
Innovation is another stated priority. The regulator plans to make greater use of data analytics and technology and to refine the way it collects information from firms. Those intentions describe future work. They do not establish that new systems have already been deployed or specify a timetable for individual changes.
Transparency is intended to make the PRA’s priorities and decisions clearer to regulated firms, Parliament and the wider public. The forthcoming strategy is expected to provide a framework for reporting on the regulator’s work. The document itself has not yet been published, so its eventual measures and commitments remain to be seen.
Mortgage-model requirements under review
Braddick also announced an independent review of the UK’s implementation of requirements for hybrid mortgage models. The review is intended to examine how firms can maintain those models while continuing to meet regulatory expectations. It is a planned assessment, not a decision to remove or amend the requirements.
The announced review should be distinguished from the separate change to high loan-to-income mortgage rules that the PRA and Financial Conduct Authority finalised earlier this month. That policy removes an individual lender cap while retaining market-wide monitoring. The hybrid-model review announced in Braddick’s speech concerns a different set of requirements and remains forthcoming.
Balancing growth and safety
The priorities set out a direction of travel rather than a package of completed measures. Braddick’s remarks put resilience alongside the regulator’s intended support for growth, innovation and more transparent supervision. How those aims will be translated into detailed work is due to become clearer when the five-year strategy is published next year.
For financial firms, the immediate significance is that the PRA has signalled where it expects to focus its future supervisory and strategic work. Until the planned directorate, review and strategy are developed, the speech does not itself change firms’ existing obligations. Regulatory requirements already in force continue to apply unless and until the competent authorities announce further measures.
