Prudential Regulation Authority Rulebook

1

This statement of policy sets out how the Prudential Regulation Authority (PRA) uses its formal powers to address serious failings in the culture of firms. The culture of a firm has a significant impact on the PRA’s objectives of promoting the safety and soundness of firms and, for insurers, an appropriate degree of protection for policyholders. Advancement of the PRA’s objectives ultimately relies on firms conducting their business in a safe and sound manner, and support for the PRA’s objectives should be embedded in every firm’s culture¹. The culture of a firm includes its standards of behaviour.

2

This statement also explains how the PRA’s use of its powers meets the recommendations of the Parliamentary Commission on Banking Standards contained in paragraphs 970–973 of Changing Banking for Good², which were that regulators should have powers to identify and tackle serious failings in standards and culture within banks they supervise, and for the PRA and the Financial Conduct Authority (FCA) to consider cases when such powers should be deployed. Although the recommendations focus on banks, this statement of policy applies to all firms, including insurers.

3

The regulatory practices set out below are consistent with the current approach adopted by the PRA. Therefore, there are no incremental costs and benefits arising from this statement, and it does not impact on the PRA’s secondary objective of facilitating effective competition.