Leeds Reforms — BoE/PRA actions for banks

In CP17/25 the PRA proposes a one-year delay in implementing the Internal Model Approach (IMA) for the Fundamental Review of the Trading Book (FRTB-IMA) to 1 January 2028, to allow more time for a consistent international approach to emerge and to reduce operational complexity. All other UK Basel 3.1 components, including the market risk Advanced and Simplified Standardised Approaches (ASA and SSA), will be implemented as planned from 1 January 2027.

Three additional measures are proposed to improve proportionality and reduce operational burdens:

• Simplification of the treatment of collective investment undertakings (CIUs) under the ASA by introducing a 90% de minimis threshold;
• Creation of a permissions regime for firms to propose alternative capital treatments for residual risks under the ASA; and
• Updating of reporting and disclosure requirements to reflect these changes. These adjustments aim to reduce cliff-edge effects and ensure more risk-sensitive capital requirements.

The confirmation of the Basel 3.1 implementation timeline — the bulk of the requirements implemented by January 2027 followed by implementation of the internal model approach for market risk by January 2028 — provides a clear window for transition. Early engagement with the new FRTB framework will be essential, not only to ensure compliance but also to strengthen internal risk management practices and capital planning capabilities.

The PRA has confirmed that the new regime for SDDTs, originally known as the Strong and Simple regime, will be implemented from 1 January 2027, alongside the bulk of the UK Basel 3.1 requirements. The regime is designed to offer smaller firms a robust but more proportionate regulatory framework, enabling them to grow with reduced operational burdens. With the implementation timelines now aligned there will be no need for an Interim Capital Regime, as previously proposed.

The SDDT regime is intended to offer smaller firms a more proportionate and less burdensome regulatory path, creating space to focus on sustainable growth and operational efficiency.  The confirmation of clear timelines for Basel 3.1 and the SDDT regime, and the removal of the need for a transition period, will allow firms to focus on their specific implementations with greater certainty. 

There are four separate but related updates to the resolution framework:

• Resolution assessment threshold and recovery plan reviews – the primary proposal in PRA CP14/25 is the raising of the resolution assessment threshold from £50 billion to £100 billion. This is motivated by the desire to target regulatory focus and resources on systemically important firms, reduce the compliance burden on mid-sized firms and promote insolvency as a viable tool for smaller firms. The PRA also proposes to reduce the frequency with which SDDT firms need to review their recovery plans from at least annually to at least every two years. Again, this is intended to reduce administrative and regulatory burdens. However, the PRA notes that firms which are ‘new and growing’ may need to review and update their recovery plans more regularly as their business models undergo material changes.
• MREL reporting – PRA CP15/25 proposes to introduce greater standardisation and consistency in certain reporting templates for minimum requirement for own funds and eligible liabilities (MREL) reporting. The amendments are intended to improve the consistency, clarity and efficiency of the data collection process, thereby enhancing the transparency of MREL resources on a cross-firm basis, and supporting more effective resolution planning and increased operational readiness. By embedding MREL reporting into the broader resolution framework, the PRA seeks to reduce ad hoc data requests and improve the quality of information available to the BoE during resolution assessments.  
• Pillar 3 disclosures – PRA CP16/25 proposes enhancements to Pillar 3 disclosures in three key areas: firms’ resolvability resources (MREL), capital distribution constraints (CDCs) and the basis for disclosure. It introduces further standardised templates for MREL disclosures to improve transparency and comparability, a narrative requirement for CDCs to clarify their impact, and a new requirement for firms to state the regulatory basis of their disclosures. These changes aim to strengthen market discipline, support financial stability and align UK standards with international norms. The proposals are tailored by firm size and systemic importance, with more extensive requirements for G-SIIs and O-SIIs, and lighter ones for smaller firms. The proposed implementation date is 1 January 2027, with disclosures beginning for the period ending 31 December 2026.
• Approach to setting MREL – the BoE has updated its December 2021 Statement of Policy (SoP) on its approach to setting minimum requirement for own funds and eligible liabilities (MREL). The new SoP will take effect on 1 January 2026.

For banks, these proposals would introduce greater transparency and accountability around their ability to be resolved in a crisis. Enhanced reporting and disclosures will require them to demonstrate, in a clear and comparable way, that they have sufficient loss-absorbing resources to support an orderly resolution. This should support better internal risk management and capital planning. The proposals to raise the resolution assessment threshold and reduce reporting frequency for SDDTS are designed to encourage growth and reduce the burden on smaller firms.

For investors and market participants, the updates should provide more reliable, standardised information to assess the resilience and resolvability of banks, reducing uncertainty and supporting more informed investment decisions and improved market confidence.

For the wider financial system, the reforms reinforce the UK’s commitment to robust resolution planning and market discipline. By aligning with international standards and increasing transparency, they should help to safeguard financial stability, protect taxpayers from bank failures and maintain the UK’s reputation as a leading global financial centre.

Taken together, the updates will impose additional assurance and transparency obligations on the largest and most complex firms by requiring them to assess, report and disclose their preparations for resolution — mid-tier firms will only be required to make a public statement on their resolvability.

CP18/25 proposes targeted changes to the SM&CR, the regulatory framework designed to ensure that senior decision-makers in financial services firms are clearly identified and held accountable for their actions.

The PRA sets out initial (Phase 1) proposals to make the SM&CR more efficient, flexible, and less burdensome, while maintaining high standards of accountability and governance. It also suggests changes such as streamlining the approval process for Senior Management Functions (SMFs), clarifying the scope of key roles (including the Group Entity Senior Manager function), and providing more guidance on regulatory requirements. Operational improvements, such as extending the period for criminal record checks, clarifying certification requirements, and enhancing the navigability of SM&CR rules and guidance are also proposed. In addition to feedback on these proposals, the PRA invites comments on potential future (Phase 2) reforms, which may follow legislative changes being considered by HM Treasury. 

The consultation is relevant to all PRA authorised firms and individuals subject to the SM&CR, and aims to reduce compliance costs, support international competitiveness, and ensure the regime remains effective and proportionate. Responses are requested by 7 October 2025.