We are pleased to be able to offer high-level comments on the PRA’s proposed approach to recovery planning, an activity we have always supported. This consultation paper’s stated aim is to provide more detail of the PRA’s expectations to help improve the quality of firms’ recovery plans. Such guidance is always welcome since it will help increase the likelihood that these plans are credible and useable in stress.
But in this case, the PRA is also adding layers of requirements that appear to go above and beyond what the Bank Recovery and Resolution directive sets out, and crucially, without sufficiently respecting the provisions of Article 4 (“simplified obligations”). These extra layers are most keenly manifested in the proposed introduction of a “playbook” and “fire drills”. Such moves are troubling – and confusing. The Bank of England/PRA has been at pains to point out that regulated firms must continue to adhere to EU-mandated legislation - a stance that has been echoed in meetings with officials - until withdrawal from the EU is effected. Yet on this occasion the PRA is goldplating that legislation ahead of Brexit.
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