Structural Reform

Bank Of England Prudential Regulation Authority

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On 15 October 2015, the PRA published two consultation papers which form part of the post-crisis reforms to enhance the resilience and resolvability of firms:

  1. CP37/15, which sets out additional proposed ring-fencing policy, including in the areas of prudential requirements, intragroup arrangements and the use of financial market infrastructures; and
  2. CP38/15 which proposes the creation of a new framework requiring firms to ensure the continuity of critical shared services.

See ‘Policy development’ for links to the publications.


In response to the financial crisis, a number of domestic and international reforms to bank regulation have been introduced or are currently being implemented. Many of these reforms seek to improve the resilience and resolvability of banks, including through making changes to their structure. In the United Kingdom, the PRA is required, under the Financial Services and Markets Act 2000, as amended by the Financial Services (Banking Reform) Act 2013 (‘the Act’), to make rules to implement the ring-fencing of core UK financial services and facilities. Readers are referred to HM Treasury’s ‘2010 to 2015 government policy: bank regulation’ (see External Links) and Chapter 1 of CP19/14 for more information – see ‘Policy development’ below.

The changes

The changes are intended to ensure that ring-fenced bodies (RFBs) are protected from shocks that originate in the rest of their banking group or the financial system in order to minimise disruption to the continuity of the provision of core services. They are also intended to ensure that RFBs, and groups containing RFBs, can be resolved in an orderly manner with minimal disruption to the provision of core services. The Act defines three ‘core services’:

  1. facilities for the accepting of deposits or other payments into an account which is provided in the course of carrying on the core activity of accepting deposits;
  2. facilities for withdrawing money or making payments from such an account; and
  3. overdraft facilities in connection with such an account.


Ring fencing is being implemented through primary (the Act) and secondary legislation (see External Links), and PRA rules. The Government has stated its intention for ring-fencing to be implemented from 1 January 2019. The PRA plans to complete its consultation process and publish final rules and supervisory statements in advance of this date to provide firms with sufficient time for implementation.

Plans for implementing ring-fencing

In CP37/15 published on 15 October 2015, the PRA outlined that it expects firms in scope to submit near-final plans for implementing ring-fencing to their PRA and FCA supervisors by 29 Jaunary 2016. these plans build on the initial plans that were sent on 6 January 2015 and/or any subsequent updates submitted by firms during 2015.

Operational continuity – scope of apllication

CP38/15 ‘ensuring operational continuity in resolution’ does not define a precise boundary for firms to be in scope, instead it provides clarity on the proposed policy to enable firms, particularly RFBs, to start planning their approach. The PRA will issue an addendum defining the scope of application alongside a planned Bank of England consultation on the calibration of the minimum requirement for own funds and eligible liabilities (MREL) and confirm the consultation closing date for CP38/15.

Policy development

Date ​Title ​CP open/closed Policy published/planned
​15 October 2015 CP38/15 – Ensuring operational continuity in resolution ​Consultation closing date to be confirmed when addendum is published. ​tbc
​15 October 2015 CP37/15 – The implementation of ring-fencing: prudential requirements, intragroup arrangements and use of financial market infrastructures Open to 15.01.16​ ​tbc
​18 September 2015 CP33/15 – The implementation of ring-fencing: the PRA’s approach to ring-fencing transfer schemes Open to 30.10.15​ ​tbc
​27 May 2015 PS10/15 – The implementation of ring-fencing: legal structure, governance and continuity of services and facilities n/a​ ​
​6 October 2014 CP19/14 – The implementation of ring-fencing: consultation on legal structure, governance and the continuity of services and facilities ​Closed 06.01.15 ​Feedback, near-final rules and near-final supervisory statements issued in PS10/15.

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