As a first step, Parliament has been debating: whose control? As control of the rulebook becomes a stronger reality now that we are moving away from the start-position in which we simply imported all the existing rules from the EU, what are the respective roles of Parliament, the government and regulators in this process? A lot has already been said on this by us and others so I will not repeat it here, but I will point out that we are busy preparing ourselves for whatever new role Parliament allocates to us. Indeed Parliament has already decided this for the latest round of Basel rules, and my colleague Vicky Saporta is leading our efforts to re-tool our policy-making function for this new era. We are also getting on with important reforms while that wider debate unfolds, rather than waiting for it to conclude. This is procedurally complex because the position we inherit from the onshoring of EU rules is one in which the location of rules sprawls rather uncomfortably across different levels of legislation and our rulebook. This messiness was necessary to get the onshoring done on time but it makes it complex and time-consuming to update rules – so I hope that we will be able to move to a more coherent structure through time, as proposed by the government in its Future Regulatory Framework consultation. In the meantime, it means that many of our reform efforts involve decisions not just for the PRA but also for government and Parliament.
But despite the benefits of a safe and orderly exit process for firms before they get to the point of resolution or insolvency, this strategy has not been set out as a prominent feature of our approach for firms. For instance, the team running our recent check-up of the PRA found that supervisors of smaller mid-sized firms generally spend a small fraction (3%) of their time on orderly exit planning in normal times. Perhaps partly as a result of this, the business of managing these exits often proves extraordinarily challenging and time-consuming when it comes to the crunch. The exception to this is credit unions, which can nearly always be exited without great difficulties by our team together with FSCS and FCA colleagues. We therefore intend to do more in the coming years to increase our confidence that firms can exit the market without disturbing it, in an orderly way and without having to rely on the backstop of an insolvency or resolution process.