Prudential Regulation Authority Rulebook

31

The PRA has a statutory duty to co-ordinate with the FCA in the exercise of its public functions, including policymaking and supervision. As required by sections 3D and 3E of the Act, a Memorandum of Understanding (MoU) between the FCA and the PRA describes how the two regulators fulfil this duty to co-ordinate in a way that supports each regulator’s ability to advance its own objectives¹⁶,(2) and the FCA and the PRA will share their respective views on key conduct and prudential issues facing a firm. Co-ordination between the PRA and the FCA is also assisted by the membership of their CEOs on each other’s board and on the Financial Policy Committee¹⁷.

32

The PRA works closely with the FCA as part of its supervisory approach, and supervisors of dual-regulated firms co-operate routinely and meet regularly at least once a year (twice a year for the largest banks) to discuss issues of common interest as required by the MoU. Furthermore, either regulator is able to call a meeting as needed, and there is a broad range of day-to-day informal supervisory contact between the regulators beyond the meetings required by the MoU.

33

Where the PRA identifies concerns they are discussed with the FCA as appropriate and, wherever possible, the regulators come to a common view on the underlying issues and the proposed course of action.

34

Where the regulators agree that use of powers is necessary to tackle failings in standards and culture, they will seek to take joint action if appropriate. When a skilled person report is commissioned by both regulators it is commissioned in a co-ordinated manner, including using the same skilled person where practicable and appropriate. The PRA may also share skilled persons reports with the FCA. The Act and the MoU also require the PRA to consult with the FCA (and vice versa) before imposing requirements on firms, as well as requiring consultation when a firm wishes to vary its permission voluntarily. However, it may be appropriate for the PRA to take action where the FCA does not wish to, or to take different action to the FCA, depending on the circumstances of the firm and the perceived failings in culture.

35

Should enforcement action be necessary, the PRA and the FCA consult each other throughout the process, and the PRA and FCA run joint enforcement investigations where appropriate. TEST

\[MSEP=\sum_{jm1}^{I}\hat{C}_{(i,J)}^{2}\cdot \left ( \frac{\hat{Q}_{J-i}}{C_{(i,l-i)}}+ \frac{\hat{Q}_{J-i}}{S_{l-i}}+ \sum_{jml-i+1}^{J-1} \frac{C_{(l-j,j)}}{{S}'_{j}} \cdot \frac{\hat{Q}_{j}}{S_{j}} \right )+2\cdot \sum_{jm1}^{l} \sum_{kmj+1}^{l}\hat{C}_{(i,J)}\cdot \hat{C}_{(k,J)}\cdot \left ( \frac{\hat{Q}_{J-i}}{S_{l-i}}+ \sum_{jml-i+1}^{J-1} \frac{C_{(l-j,j)}}{{S}'_{j}} \cdot \frac{\hat{Q}_{j}}{S_{j}} \right )\]