What the Prudential Regulation Authority Does

While previously the Financial Services Authority covered the entire industry, nowadays the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) share its tasks. The FCA is mainly concerned with protecting consumer interests. While the PRA focuses on regulation and oversight of Britain’s over 1,600 credit unions, insurers, building societies, banks, and companies offering investment advice.

How the PRA Goes About Its Business

The Prudential Regulation Authority does not impinge directly on insurance brokers. However it does influence the norms and standards of the insurers they serve. A basic understanding of the pressures they face can greatly facilitate collaboration. Hence the purpose of this short overview.

The three broad objectives of the PRA are as follows:

  • To encourage firms in the industry to follow sound and safe financial governance
  • To secure a practical level of protection of the interests of the clients they serve
  • To promote a spirit of competition in the industry offering consumers fair deals

There are two main thrusts in the Prudential Regulation Authority policy. Firstly, it establishes a series of norms and standards the industry must comply with. Secondly, it audits firms for compliance, and steps in and takes action where they are outside its boundaries.

The Values Underpinning the Prudential Regulation Authority

The PRA believes in using logical decision-making in its assessment of the compliance and non-compliance of the financial companies in its remit. It wants to ensure their clients’ interests are paramount. Secondly, it looks ahead of the current moment to detect warning signs in the future. However, its primary focus will always be on the stability of their financial policies.

Being part of the Bank of England, it also thinks ahead in terms of a healthy economy going forward. That said, is does not expect a 100% success rate. It is more interested in UK financial institutions being able to provide reliable ongoing finance services to their clients.

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