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Your money and the financial system Page 18 Prudential Regulation Authority (PRA) The PRA was set up as part of a package of major reforms to help safeguard the financial system. The PRA is a subsidiary of the Bank of England. It is responsible for the safety and soundness of around 1,700 banks, building societies, credit unions, insurers and major investment firms. The PRA protects the interests of insurance policyholders and promotes competition among the firms it regulates. INSURERS 1,700 FINANCIAL FIRMS BUILDING SOCIETIES BANKS INVESTMENT BANKS The PRA monitors and sets standards for safe levels of capital and liquidity in these firms. CREDIT UNIONS
Page 19 The PRA uses judgement to focus its work on those firms and activities posing the greatest risks to the financial system and to policyholders. It assesses the soundness of firms against the risks they are facing and risks that could arise in future. The PRA works with firms to minimise these risks. But that doesn’t mean a firm won’t be allowed to fail. If the worst happens, the PRA works with the Bank of England’s Special Resolution Unit to ensure that a bank can fail without disrupting the supply of key financial services. This means the wider financial system can continue to support the economy and the needs of the public. The PRA Board is accountable to Parliament, mainly through regular appearances of its Chief Executive before the House of Commons’ Treasury Select Committee. The PRA publishes its own Annual Report. The PRA’s most important decisions are taken by its Board. The PRA Board is chaired by the Governor of the Bank of England. Its members include the Bank’s Deputy Governors for financial stability and prudential regulation. The PRA Board has a majority of independent external members, including the Chief Executive of the Financial Conduct Authority (FCA) and four others selected for their experience and expertise in financial services. The PRA works closely with other parts of the Bank of England, especially the Financial Policy Committee, which is able to give Directions and make Recommendations to the PRA. It cooperates closely with its sister regulator, the FCA. The FCA is a separate institution that acts to prevent market abuse and ensures that consumers get a fair deal from financial firms.
Page 1 and 2: Your money and the financial system
Page 3 and 4: Page 3 The Bank of England is able
Page 5 and 6: Page 5 In the UK, the high-street b
Page 7 and 8: Page 7 Each day the financial syste
Page 9 and 10: Page 9 ASSETS A bank uses its capit
Page 11 and 12: Page 11 A bank is insolvent if its
Page 13 and 14: Page 13 A bank is insolvent if with
Page 15 and 16: Page 15 The Financial Policy Commit
Page 17: BUILDING SOCIETIES Page 17 The FPC
Page 21 and 22: Page 21 Only banks and building soc
Page 23 and 24: Page 23 YOUR MONEY AND THE FINANCIA

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