Much of the content of CP 5/13 is sensible and welcome – we give several examples in our full response. But some of the policy choices proposed by PRA are unwelcome and, in our view, unjustified – and in certain instances renege on clear commitments given by the FSA in October 2012. And because of the cumulative impact of these measures in requiring firms to hold more CET 1 capital, sooner, than CRD 4 itself, we consider they will prove especially damaging to mutuals if implemented.

We also challenge some key aspects of the impact assessment in the consultation paper. This fails to identify (separately from the impact of the minimum CRD 4 measures mandated at EU level) the incremental impact of the PRA’s policy choices. And one of the most damaging PRA proposals does not even appear to have been included in the set of assumptions/ calibrations. So the conclusions on net costs/ benefits may be seriously flawed.

We welcome the decisions not to accelerate the introduction of the capital conservation buffer, or the minimum CRR paths for phasing-out of grandfathered non-compliant capital instruments and phasing-in of deductions from AT 1 and T2. But we strongly oppose the immediate application of 100% of the CET 1 deductions and filters (noting in passing that the FCA has made the opposite policy choice – to adhere to the phasing-in schedule).

Our response to the PRA consultation on implementation of CRD/ CRR