2.1.2 The PRA's Obligations Flashcards
PRA 3 Statutory Objectives
1) A general objective to promote the safety and soundness of a firm it regulates
2) Objective specific to insurance firms - to contribute to the securing of an appropriate degree of protection for those who are, or may, become insurance policyholders
3) A secondary objective to facilitate effective competition
The PRA advances its objectives using both regulation and supervision using 3 characteristics
1) A judgement-based Approach - using judgement to determine whether financial firms are safe and sound, whether insurers provide appropriate protection for policy holders, whether firms continue to meet the threshold contitions
2) A Forward-looking Approach - assessing against current risls and possible future risks. PRA will try to intervene at an early stage
3) A Focused Approach - Focusing on issues and firms posing the greatest risk to the stability of the UK financial system and policy holders
Firms must be resilient against failure, and if they do fail, it must avoid harm resulting from disruption to the continuity of the provision of financial services
The Financial Services Banking Reform Act reformed Section B of FSMA 2000 (the PRA’s general objective)
Made a new continuity objective part of the general objective when the PRA is dealing with ring-fencing matters.
PRA must ensure ring-fenced bodies do not do things that put the continuity of core services n the UK at risk, and are also insulated fro external risks, including The fall in the value of trading assets or international assets.
