Katharine Braddick, Chief Executive of the PRA, outlined the initiative during an address at London’s Mansion House on 22 October 2026. The announcement signals an increased emphasis on ensuring that prudential regulation remains proportionate, effective and responsive to changing market conditions.
The PRA, which operates within the Bank of England and supervises banks, building societies, credit unions, insurers and major investment firms, intends to work closely with financial institutions to understand how regulatory requirdZements affect their ability to provide capital, support investment and price financial services.
As part of this initiative, the regulator plans to publish its first five-year strategy in 2027. The strategy will explain how competitiveness and growth considerations are incorporated into supervisory decisions and how their impact will be assessed over time.
Financial Stability and Cyber Resilience Remain Central Priorities
Despite the renewed focus on competitiveness, the PRA has emphasised that safeguarding the resilience of Britain’s banking and insurance sectors will remain its overriding responsibility.
The regulator plans to strengthen supervision of operational and cybersecurity risks, reflecting growing concerns about increasingly sophisticated cyberattacks and technology-related vulnerabilities within financial institutions.
Braddick announced the establishment of a dedicated supervisory division for operational and cyber resilience. The division will report directly to the PRA’s Chief Executive and function as a specialised centre for supervisory expertise.
The initiative highlights the importance of integrating operational resilience, cybersecurity controls and technology risk management into the broader prudential supervisory framework.
Proposed Reforms to Senior Management Accountability Rules
Alongside the regulatory review, the PRA and Financial Conduct Authority (FCA) announced further proposals to simplify the Senior Managers and Certification Regime (SM&CR), introduced in 2016 to strengthen individual accountability within financial institutions following the global financial crisis.
The proposed reforms aim to reduce administrative requirements and accelerate certain senior management appointments without compromising accountability standards.
Key proposals include removing regulatory pre-approval requirements for almost half of existing Senior Manager Functions, replacing them with notification requirements, and eliminating certain certification obligations affecting approximately 7,700 individuals.
Regulatory estimates indicate that the proposed changes could reduce annual industry compliance costs by approximately 53%, to £229.9 million. The broader reform programme is expected to generate substantial savings while allowing institutions greater flexibility in managing senior appointments and internal governance arrangements.
The consultation will remain open until 22 January 2027, with implementation anticipated during the second half of 2027, subject to the necessary legislative changes.
Implications for Banking Risk Management and Compliance
The PRA’s announcement reflects an evolving regulatory approach in which financial stability, effective governance and competitiveness are increasingly being considered together.
For banks and other regulated financial institutions, the proposed changes underscore the need to maintain robust capital management, operational resilience and internal accountability frameworks while identifying opportunities to simplify compliance processes.
The stronger focus on cyber resilience also suggests that technology governance, third-party dependencies, incident response capabilities and business continuity arrangements will continue to attract supervisory scrutiny.
For risk management and compliance professionals, the developments demonstrate that regulatory simplification does not necessarily represent a relaxation of risk management expectations. Instead, institutions may face greater responsibility for demonstrating that internal governance and control systems remain effective even where procedural regulatory requirements are reduced.
The forthcoming five-year strategy will be an important development in determining how the UK balances prudential safeguards with its ambition to strengthen the competitiveness of its financial services sector.
