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In line with the Independent Commission on Banking (ICB) recommendations, the UK legislation implementing the SRB requires the Financial Policy Committee (FPC) to establish a framework for an SRB that applies to large building societies and ring-fenced bodies (RFBs). The SRB Regulations require the PRA to apply the framework set out by the FPC on the SRB from 1 January 2019.
The FPC published ‘The Financial Policy Committee’s framework for the systemic risk buffer’ (‘FPC framework’) in May 2016. Alongside the FPC framework, this SoP will form the Bank of England’s broader framework for the SRB.
This SoP is relevant to ring-fenced bodies within the meaning of section 142A of the Financial Services and Markets Act 2000 (FSMA) and large building societies that hold more than £25 billion in deposits (where one or more of the accountholders is a small business) and shares (excluding deferred shares) – jointly ‘SRB institutions’.
The PRA will review this SoP in 2018, following the review of the FPC framework. Should the FPC framework be reviewed before that, the PRA will bring forward the review of this SoP accordingly. The PRA will then review this SoP at least every two years, as is mandated by the SRB Regulations.
The policy has been designed in the context of the current UK and EU regulatory framework. The FPC and PRA will keep the policy under review to assess whether any changes would be required due to changes in the UK regulatory framework, including those arising once any new arrangements with the European Union take effect.