Prudential Regulation Authority Rulebook

1.1

This statement of policy (SoP) sets out the Prudential Regulation Authority’s (PRA) approach to the granting of rule permissions under section 138BA of the Financial Services and Markets Act 2000 (FSMA). It is relevant to all persons subject to PRA rules.

1.2

Sometimes it may be appropriate for rules to vary if the PRA is satisfied that a firm meets specific criteria. Where it is justified, the PRA can enable a firm to disapply certain PRA rules or requirements, or to apply them with appropriate modifications that better fit the firm’s circumstances. This is achieved through permissions, modifications, or waivers.

1.3

Section 138BA of FSMA was introduced by the Financial Services and Markets Act 2023 and allows the PRA, on the application or with the consent of a person who is subject to PRA rules, to give the person a permission that enables them to not apply rules, or to apply rules with a modification specified in the permission (rule permission).

1.4

The PRA also has other powers in UK legislation for granting waivers and permissions (sometimes called approvals). These powers include:

1. a. Under s138A of FSMA, the PRA has a general power to modify or waive its rules where it is satisfied that the following criteria are met: (a) compliance with the rules would be unduly burdensome or would not achieve their intended purpose and (b) modifying or waiving the rule would not adversely affect any of the PRA’s objectives.
2. b. Under assimilated law (previously known as retained EU law), notably the Capital Requirements Regulation (CRR) and Solvency II (SII), the PRA has powers to grant permissions and approvals in relation to specific provisions. Under these assimilated law powers, the PRA can usually only grant permissions when firms meet certain criteria. These powers are expected to be revoked as part of the programme for the repeal and replacement of assimilated law.^[1]
3. c. Under s144G of FSMA, the PRA has the power to grant permissions in relation to certain PRA rules (CRR rules). The PRA is using this power to transfer certain CRR permissions to the Rulebook as part of the implementation of Basel 3 and Basel 3.1 standards. Where the PRA has made a s144G permission available in relation to a particular CRR rule, the specific criteria for granting the permission are usually set out in the rule or in an associated SoP or supervisory statement (SS).

1.5

The PRA’s power to grant rule permissions under s138BA of FSMA is not subject to statutory criteria. This SoP explains how the PRA will generally exercise the power.