Regulation  

Body’s future autonomy called into question

Body’s future autonomy called into question

The future legal form of the PRA is uncertain, the comptroller and auditor general of the National Audit Office has warned.

In his certificate and report of the PRA’s financial statements, which were laid before the Houses of Parliament on Monday 15 June, Sir Amyas Morse said: “There is uncertainty over the PRA’s ability to continue to operate in its current legal form.”

His comment came in relation to the Bank of England’s proposals to merge the functions of the PRA with the Bank of England, so the PRA would cease to be a separate legal entity. This had been mooted in the Bank of England Bill which was announced in the Queen’s Speech to parliament.

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Sir Amyas said the possibility of the PRA becoming an authority within the Bank had raised a question mark over the “going concern” of the PRA. However, on page 59 of the PRA’s annual report and accounts 2015, the director’s statement had claimed the PRA would be able to continue its work, and that this change “would not affect the going concern assessment”.

The director’s statement read: “The PRA has sufficient resources to continue its business for the foreseeable future.”

Adviser view

Simon Mansell, IFA for Worcester-based Temple Bar, said: “A move to bring the PRA into the BoE would make the Bank a much more authoritative figure – but any focusing of power and control in one body in this way, instead of having different bodies, is not always a helpful thing.

“Often when you have different bodies arbitrating on financial matters you have different perspectives, which is a good thing. This strikes me as being quite a change, and a rapid one, from the Twin Peaks regulation that came in just two years ago, without what appears to me to be a logical reason behind it.”