Prudential Regulation Authority Rulebook

5.1

This chapter sets out the PRA’s expectations regarding the governance arrangements supporting a firm’s assessment, report and public disclosure.

5.2

The PRA expects a firm that is required to undertake an assessment under Chapter 2 of the rules to ensure that its management body oversees, assesses and approves the assessment before the firm submits its report to the PRA. Firms are already required under Rule 5.1 of the General Organisational Requirements (‘GoR’) Part of the PRA Rulebook to have their management body define, oversee and be accountable for the implementation of governance arrangements that ensure effective and prudent management of the firm. The PRA expects that requirement also to include a firm’s preparations for resolution, which are part of a firm’s prudential risk management. Such board-level engagement and accountability is important to ensure that there is adequate oversight of these key activities. Moreover, the PRA expects a firm to embed fully the process of assessment, and preparing and approving reports into its governance framework.

5.3

Under Rule 4.1 of the Allocation of Responsibilities Part of the PRA Rulebook firms are required to allocate the ‘prescribed responsibility’ for developing and maintaining the firm’s recovery plan and resolution pack and for overseeing the internal processes regarding their governance to a Senior Manager. This necessarily requires firms to take actions in business-as-usual to plan for stressed conditions that could potentially lead to business failure and resolution.

5.4

To that end, the PRA expects the board, its sub-committees (including, where appropriate, the risk and audit committees) and senior management to have clear responsibilities for approving the report required under Chapter 3 of the Resolution Assessment Part, and to devote adequate time and resources to this task. As part of this process, the board and senior management should give particular attention to remaining barriers to resolvability, as well as any planned actions to address those barriers and the time horizon over which the firm reasonably expects it would be able to do so.

5.5

A firm management body is required under the GoR to oversee the process of disclosure and communications. The PRA expects this to encompass a firm's public disclosure under Rule 4.1 of the rules.

5.6

Where a firm’s consolidated group contains a ring-fenced body (RFB), the PRA expects that the management body of the RFB is involved in the development of the consolidated group’s single assessment and its single report for submission to the PRA, as described in paragraph 2.9. The RFB should also take steps to manage any conflicts between interests arising between the RFB and the group as part of the group’s assessment.