Prudential Regulation Authority priorities 2025/26

The plan highlights key regulators and supervisory focuses that firms should consider, aligning with the PRA’s four strategic priorities:

1. Maintain and ensure the safety and soundness of the banking and insurance sectors and ensure continuing resilience.
2. Be at the forefront of identifying new and emerging risks and developing international policy.
3. Support competitive, dynamic and innovative markets, alongside facilitating international competitiveness and growth, in the sectors that we regulate.
4. Run an inclusive, efficient, and responsive regulator within the central bank.

Regulated entities should pay particular attention to the following topics highlighted in the business plan:

Maintain and ensure the safety and soundness of the banking and insurance sectors and ensure continuing resilience

Financial Resilience: Banking

1. Implementing the Basel 3.1 standards

• During 2024/25, the PRA published its near-final rules for the Basel 3.1 standards. These contained  adjustments to enhance competitiveness and growth, such as lowering capital requirements for SMEs and infrastructure projects. In January 2025, the PRA announced that, in consultation with HMT, the implementation date for the Basel 3.1 standards would be delayed to 1 January 2027. This would provide time for greater clarity around the US implementation plans for Basel III. The transitional arrangements in the rules will be reduced to 3 years to ensure full implementation remains in line with the original proposals on 1 January 2030

2. Bank stress testing

• In 2025, the PRA and the Bank of England will conduct a Bank Capital Stress Test involving the largest UK banks to assess financial cycle risks. The results will inform the setting of capital buffers.

3. Securitisation

• In H2 2025, the FCA and PRA will consult on changes to securitisation rules to make the framework more proportionate. The PRA consulted on draft rules in CP13/24 to replace the CRR securitisation capital requirements and plans to publish final rules in 2025.

4. Internal ratings based (IRB) models & model risk, liquidity, and credit risk management

• The PRA has published various policy statements on the IRB approach to credit risk and will continue to work with firms on model approval and model review submissions. During 2025/26, the PRA will focus on how banks are implementing SS1/23 (Model risk management principles).

5. Liquidity lessons learnt from the events of March 2023

• The events of March 2023 highlighted liquidity and funding risks for UK deposit takers, leading to changes in how firms access sterling central bank reserves in 2025. The PRA will continue supervising these risks and plans to review the liquidity supervisory framework, with a proposed consultation in 2026.

6. Future of payments

• The PRA continues to monitor innovations in deposits, e-money, and stablecoins, as outlined in the 2023 Dear CEO letter. In 2025/26, the PRA will develop policies to implement the BCBS standard on banks' cryptoasset exposures and engage with international partners to assess developments in digital money and cryptoasset markets.

7. Remuneration reforms

• In November 2024, the PRA and FCA published CP16/24, proposing further remuneration reforms to streamline the UK regime, enhance competitiveness, and support responsible risk-taking. The final policy is expected to be published in H2 2025 after considering feedback.

Financial Resilience - Insurance

8. Solvency UK: Accelerating innovation and investment

• In 2024, the PRA implemented the Solvency UK prudential regime for insurers, including reforms to the Matching Adjustment rules to enhance investment in the UK economy. In April 2025, the PRA consulted on the Matching Adjustment Investment Accelerator to further reduce investment barriers. The PRA will continue embedding the new regime and collaborating with HMT, the National Wealth Fund, and the insurance industry to unlock new investment opportunities.

9. Growth in the bulk purchase annuity (BPA) market, including funded reinsurance (Funded Re)

• The BPA market is expected to grow rapidly in 2025/26, with UK insurers increasingly engaging with offshore reinsurers through Funded Re. In July 2024, the PRA published SS5/24 on Funded Re, highlighting that firms are not fully meeting supervisory expectations. The PRA will include a Funded Re recapture scenario in the 2025 Life Insurance Stress Test and assess firms' risk management standards.

10. Insurance stress testing

• In January 2025, the PRA launched the LIST 2025 to assess the financial resilience of the largest UK life insurers, with individual and aggregate results expected to be published in Q4 2025. For general insurers, a dynamic stress test will commence in May 2026, with preparatory details provided from September 2025 onwards.

11. Insurance special purpose vehicles (ISPVs)

• ISPVs, used to cover major catastrophe risks, have seen over $1.9 billion deployed in the Lloyd’s market but less activity than expected. In 2025, the PRA will finalise changes to the UK ISPV framework to streamline processes, clarify expectations, and enhance international competitiveness and growth.

12. General Insurance (GI)

• In 2025/26, the PRA will monitor how GI firms navigate underwriting cycles and work with the Society of Lloyd’s to oversee managing agents. The PRA will also focus on cyber underwriting risk, informed by the cyber risk reporting template (PS3/24) effective from 31 December 2024, and review existing supervisory expectations (SS4/17 - Cyber Insurance Underwriting risk) to reflect market developments.

Multi-sector regulatory reforms

13. Operational risk and resilience

• In March 2025, the FCA, Bank, and PRA operational resilience policies came fully into force, requiring firms to deliver important business services within defined impact tolerances. The PRA will continue monitoring firms' digital transformation programmes and sector-wide risks, engaging through CMORG and the G7 Cyber Experts Group. In December 2024, the PRA published CP17/24 on operational incident and outsourcing reporting, aiming to finalize the policy in 2025.

14. Implementation of the critical third party (CTP) regime

• The Financial Services and Markets Act 2023 empowered HMT to designate certain third-party service providers as critical to the UK financial system. In November 2024, the PRA, Bank, and FCA published documents on the CTP regulatory regime. The PRA will continue working with other regulators to oversee CTPs and strengthen domestic and international coordination.

Be at the forefront of identifying new and emerging risks and developing international policy

15. Climate change

• The PRA will consult on updates to SS3/19 in 2025 to enhance banks' and insurers' approaches to managing climate risks. The update will consolidate existing guidance and developments in international practices since the original supervisory statement was published. The PRA will also support the UK Government's action on Sustainability Reporting Standards and continue industry support through the Climate Financial Risk Forum.

16. Cyber resilience

• In 2025, the PRA will continue monitoring firms' cyber threat management through CBEST, STAR-FS, and CQUEST, focusing on issues highlighted in the 2024 CBEST publication. The PRA will also consult on ICT and cyber resilience expectations in H2 2025 and engage internationally to enhance operational and cyber resilience standards.

Support competitive, dynamic and innovative markets, alongside facilitating international competitiveness and growth, in the sectors that we regulate

17. Finalisation and implementation of the strong and simple framework for small domestic deposit takers (SDDTs)

• The PRA's ‘strong and simple’ initiative aims to simplify the prudential framework for small, domestic-focused banks and building societies while maintaining their resilience. In Q4 2025, the PRA will publish a policy statement on the simplified capital regime and the additional liquidity simplifications.

18. Review of the current mutuals landscape in the UK

• In response to a request from the Economic Secretary to the Treasury to support inclusive growth, the PRA and FCA will produce a report by H2 2025 assessing the mutuals landscape. The report will cover building societies, credit unions, friendly societies, and other mutual insurers, representing approximately £740 billion in assets and serving around 30 million members.

19. Ease of entry and exit

• The PRA's ease of exit policy for banks (PS5/24) will come into force on 1 October 2025, and for insurers (PS20/24) on 30 June 2026. These policies aim to ensure firms can exit the market solvently and orderly. The PRA will engage with industry bodies and update internal processes to support firms' preparations.

Run an inclusive, efficient, and responsive regulator within the central bank

20. Future Banking Data (FBD)

• The FBD project, combining the Banking Data Review (BDR) and Transforming Data Collection (TDC), aims to reduce costs and improve data quality in banking regulatory reporting. In 2025/26, the PRA will consult on deleting underused templates, develop a firm-facing portal for data collection, and work with industry and the FCA to shape the future strategy for FBD.

21. Effective authorisation process

• In 2024, the PRA handled over 1,800 regulatory transactions, with 99.7% of statutory cases completed within deadlines, thanks to streamlined processes and improved technology. The PRA will continue these initiatives in 2025, promoting open dialogue with industry and offering a 'concierge service' to help international firms navigate UK authorisation processes.

22. Implementing changes to the Senior Managers & Certification Regime (SM&CR)

• Following the publication of DP1/23, the PRA and FCA will consult on changes to the SM&CR in 2025 to improve clarity, efficiency, and proportionality, reducing administrative burdens and supporting international talent flow. The PRA will also work with HMT and the FCA to replace the certification regime with a more proportionate approach, as announced by the Chancellor in November 2024.

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