The Prudential Regulation Authority (PRA) today published the consultation paper CP12/16 “Supervising building societies’ treasury and lending activities”. This consultation paper (CP) sets out proposed changes to Supervisory Statement 20/15 on the approach and expectations of the PRA in its supervision of building societies’ treasury and lending activities.
The CP and draft supervisory statement are relevant to building societies, and should be read in conjunction with the PRA Rulebook and the PRA’s approach to banking supervision.
The purpose of the existing supervisory statement is to set out PRA expectations in respect of societies’ lending and treasury activities, and for compliance with the requirements of the Building Societies Act 1986 and the PRA Rulebook. It is relevant for all building societies.
The proposed new version of the supervisory statement is included as an Appendix to this CP. The revised statement (see Appendix) incorporates most of the text from SS20/15, but the material has been reorganised under six headings:
(a) introduction;
(b) overview of PRA expectations;
(c) lending;
(d) financial risk management;
(e) changes to supervisory approaches;
(f) business model diversification.
The main text is supported by a number of tables included as appendices. The introduction and overview chapters have been expanded to explain in more detail the rationale for the supervisory statement, and how it is intended to be used.
The PRA welcomes views on the draft supervisory statement by Monday 4 July 2016. The PRA statement and the consultation paper can be found here.