Prudential Regulation After the Latest PRA Rulebook Changes

The PRA's most recent rulebook changes recalibrate capital and governance expectations for banks and insurers in ways that will shape supervisory conversations for the next several years, even where the headline capital requirements have not moved dramatically.

This paper focuses on the governance provisions specifically — the expectations placed on senior management functions and the evidentiary standard the PRA now applies when assessing whether a firm's governance framework was adequate at the time a prudential issue arose.

Documentation of governance decisions is now, functionally, part of prudential compliance. Firms that can evidence the reasoning behind a governance decision at the time it was made are materially better positioned in a subsequent PRA review than firms relying on reconstructed rationale after the fact.

We recommend boards treat this as an operational, not just a legal, question — building contemporaneous documentation into governance processes now, rather than as a response to a future PRA request.