Nicky Morgan, new Chair of the Treasury Committee, and Sam Woods of PRA have exchanged letters on Brexit planning. The PRA response explained PRA’s work in assessing the scenarios that might have the biggest impact on its objectives – such as a hard Brexit with no ongoing cross-border market access. PRA has received over 400 replies to the letter it wrote to firms in April about contingency planning. Only a few very small insurers have not replied. PRA is now analysing the responses.
In the meantime, the FPC has considered the potential risks to financial stability and discussed them in the June Financial Stability Report, and is looking more at cross-sectorial risks.
Finally, the letter notes that restructuring by firms to mitigate risks to their business will in general increase complexity, and authorisation and supervision will place an extra burden on PRA’s resources.
For all these reasons, PRA calls for an implementation period.