In April 2013, the prudential business unit at the UK regulator, the Financial Services Authority, will hand over its work to the Prudential Regulation Authority. Its head, Andrew Bailey, has told an audience of banks, insurers, building societies, credit unions and investment firms more about his approach to two PRA approach documents published last week.

“The … approach in practice ... will be based on setting clear and concise standards for all PRA-regulated firms. The PRA’s approach will be very clearly judgement-based rather than focusing on narrow rules and it will be forward-looking, taking into account a range of possible risks to our objectives and the stability of firms.

“The PRA will expect firms to support and conform to the public policy objectives set by Parliament. This will not be a zero failure regime, but one where firms can fail in an orderly way without major detriment to the wider system.  We will be here to ensure the safety and soundness of firms and the stability of the financial system. We want, and need, to ensure that the public can put their trust in a safe and sound financial system for the future.”

One document sets out the PRA’s intended approach towards regulating deposit-takers and investment firms. The other is specifically focused on insurers.