Treasury Sub-Committee examines ‘Strong and Simple’ changes to bank capital requirements

• Parliament TV: watch the session
• Inquiry: Strong and Simple Framework
• Treasury Sub-Committee on Financial Services Regulations

Purpose of the session

The Prudential Regulation Authority (PRA) is seeking to mitigate the ‘complexity problem’ that can arise when the same prudential requirements are applied to all banks and building societies, regardless of their size and business model, through their ‘Strong and Simple Framework’.

Smaller firms may incur higher costs to understand, interpret, and comply with prudential requirements compared to larger firms, which can damage the ability of smaller and newer entrants to the market to compete with established firms.

In written evidence to the Sub-Committee, the Building Societies Association outlined that compliance costs were ten times higher for smaller societies than larger firms.

The PRA’s proposals aim to simplify the prudential framework for smaller – or ‘non-systemic’ banks and building societies, while maintaining their resilience. However, changes to regulation could create a barrier to growth, as smaller firms may need to incur significant costs to change requirements in order to grow.

In the session, the Sub-Committee will question experts and industry representatives on the proposals and the prospect of further reform. MPs are also likely to examine the PRA’s timescale for introduction of the reforms, and the scope of the changes.

Witnesses

2.15pm, Wednesday 20 July

• Simon Hills, Director of Prudential Policy, UK Finance
• Heidi Jenvey, Director of Risk, Aldermore Bank
• Robin Fieth, Chief Executive Officer, Building Societies Association
• Nick Lee, Head of Regulatory and Government Affairs, OakNorth

Further information

• About Parliament: Select committees
• Visiting Parliament: Watch committees

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