Call for Evidence

The Prudential Regulation Authority (PRA) is seeking to mitigate the ‘complexity problem’ that can arise when the same prudential requirements are applied to all firms of different sizes and business models. The PRA has published draft proposals which aim to mitigate against this problem through its ‘strong and simple’ initiative that would seek to simplify the prudential framework for non-systemic domestic banks and building societies, while maintaining their resilience.The Treasury Sub-Committee on Financial Services Regulations will hold a short inquiry into the PRA’s proposal for a “Strong and Simple Framework” and welcomes views on:

1. The Strong and Simple Framework proposal generally and the PRA’s consultation.

2. The scope of the Strong and Simple Framework.

a. Whether activities excluded from the Strong and Simple Framework should be included

b. Whether activities included within the Framework should be excluded

c. Whether the classifications of firms that are included or excluded are appropriate

3. Whether the Strong and Simple Framework proposals are appropriate to safeguard financial stability, and the safety and soundness of individual firms.

4. Whether the Strong and Simple Framework proposals sufficiently simplify the rules for affected firms

5. How the proposals should be implemented in the context of the Basel 3.1 Standards on Banking Supervision and/or any other relevant international rules or requirements

6. How the proposals should be implemented in the context of firms using their own Internal Ratings Based models

7. The effect of the Strong and Simple Framework on competition within the UK market

8. The wording of the draft instrument giving effect to the proposal

The Sub-Committee may decide to publish submissions which are prepared specifically for it. Respondents may choose to send copies of their responses to the PRA’s consultation: these would inform the Sub-Committee’s inquiry but the presumption is that they would not be published by the Sub-Committee.

The deadline for responses is 5.00 pm on Monday 11 July 2022.