PS19/24 – Strong and Simple Framework: The definition of an Interim Capital Regime (“ICR”) firm was issued by the Prudential Regulation Authority (“PRA”) at the end of 2024 and is the third document finalising the rules and setting out the framework for the ICR, with the previous documents, PS17/23 (December 2023) and PS9/24 (September 2024), providing the near final rules. The focus of the latest Policy Statement is an explanation regarding how eligible firms can join the ICR and benefit from the waivers that are applied to these firms.
PS19/24 – Clarifications
PS19/24 builds on the previous two Policy Statements confirming that the ICR will allow firms to keep their current capital requirements until 2027, when the Small Domestic Deposit Taker (“SDDT”) regime will be implemented. The SDDT regime will apply to solo firms as well as firms within a wider UK consolidation group and Counterparty Credit Risk (“CCR”) consolidation groups.
UK banks or building societies will, if they meet the definition of an ICR firm, be provided with a modification of the rules by the PRA, allowing firms to become subject to the ICR (a modification by consent) thereby allowing the Firm to maintain their current capital requirements. Firms that are part of groups based outside of the UK would have to apply to the PRA to benefit from this modification. Upon agreeing to the modification, ICR firms and ICR consolidation entities must certify (on the same day) that the entity meets the SDDT criteria, as detailed in PS9/24, to be eligible for the ICR.
If, however, an ICR firm or consolidation group ceases to meet the SDDT criteria, the PRA must be notified within a period of 14 days from the point that the ICR firm or ICR consolidation group no longer meet the SDDT criteria. The firm or group will then be required to meet the requirements of the Basel 3.1 standards.
Implementation
The final rules relating to the CRR provisions and the accompanying technical standards are due to be published in Q1 2025. This will include the disapplication of rules based on the changes that are upcoming for ICR firms.
How can Complyport Help?
Complyport provide comprehensive compliance solutions, expert guidance and tailored strategies to help firms effectively manage and implement the proposed remuneration reforms.
Complyport can support you by providing:
- Prudential review: Reviewing your firm’s prudential framework and ensure that regulatory conditions are being met.
- Implementation Support: Supporting with the implementation process, ensuring your firm’s framework is reflective of the regulation.
- Ongoing Monitoring and Updates: Providing continuous monitoring and compliance updates to stay ahead of regulatory changes.
