The FCA has a strategic objective to ensure that the relevant markets for financial services function well. Its formal operational objectives are to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers in relevant markets. It is obviously important that the FCA and PRA work closely together even though they have separate, differing objectives. Perhaps the most crucial aspects joining us are (i) that all PRA-authorised firms are dual regulated by the FCA as well for conduct purposes (ii) that the FCA has a primary objective to promote effective competition and the PRA has a secondary objective to facilitate it, and (iii) the FCA and PRA depend on shared data to carry out their roles. The close co-operation of the PRA and FCA is built into the system in part through cross membership of boards. The CEO of the FCA sits on the PRA Board (and is an FPC member ex officio). The CEO of the PRA sits on the FCA Board (and is also an FPC member). The PRA has a Board because it is currently constituted as a formal subsidiary of the Bank of England. It has been proposed that this arrangement changes so that the PRA becomes an authority within the Bank, and the PRA Board would become a new Prudential Regulation Committee. These proposals are subject to public consultation and will be debated in Parliament before being finalised.
We probably won’t know for sure just how effective the new regime is until we reach another crisis. Meanwhile we need to guard against the reforms being rolled back as a result of a period without crisis. Let’s complete the programme, give it time to work, be supportive of growth wherever we can, and be open minded about change. But let’s also be cautious about the siren voices of financial self-interest that were partly responsible for luring us on the rocks in the first place. 12  BIS central bankers’ speeches  BIS central bankers’ speeches  13  Annex 1 – Risk based minimum capital requirements and buffers under CRDIV  14  BIS central bankers’ speeches  Annex 2 – Key policy initiatives, by intended implementation date  This diagram, which appeared in the PRA Annual Report 2014/15, highlights some of the major policy work streams that will support delivery of the PRA’s strategy. It includes initiatives for which there is a publicly identified implementation date at UK or international level; however these may be subject to future revision. BIS central bankers’ speeches  15