The United Kingdom’s Prudential Regulatory Authority (PRA) has “done as much as it can do to de-risk a no-deal [Brexit] cliff edge,” according to Mr. Sam Woods, deputy governor for prudential regulation and chief executive officer of the PRA, Bank of England.
He said the regulator has been preparing for the worst-case scenario by stress-testing banks, introducing a special liquidity requirement for the largest financial institutions and having a temporary permissions regime for European firms operating in the United Kingdom.
Speaking at the MMC Rising Professionals’ Global Forum, Mr. Woods told delegates the Bank had also done some work to help inform the debate about what the post-Brexit regulatory regime should look like and how the PRA can support the London market in its drive for innovation.
He described the type of regulation he would like to see post Brexit, emphasizing the goal was continuity and robust prudential standards. “We need to aim for a system in which the burden on firms is not greater than it needs to be,” he said.
In relation to insurance he said: “We’ve been very clear there are bits of the regime that we don’t like because we think it drives the wrong response, such as the risk margin on the life side.” And more broadly he commented that “if we are outside the European Union we could go back to something more like the style of Senior Managers, which has a lot less detail in legislation.”
Asked about the PRA’s role in fostering innovation in the insurance sector, he said that while a post-Brexit regulatory framework should include dynamism and responsiveness, it should not be weak. “The financial system is extremely adaptable and as regulators we need to keep pace with that.”