On 17 April 2026, the PRA published its Business Plan for the 2026/27 financial year, which sets out the PRA’s strategic priorities and confirms its continued focus on safety and soundness and policyholder protection, alongside a proportionate and efficient approach to regulation. Over the year ahead, the PRA will continue to embed key reforms, including the implementation of Basel 3.1, the Strong and Simple framework for smaller banks (SDDTs), and enhancements to operational resilience.

PRA’s Strategic Priorities for 2026/27

Priority 1: Maintain the safety and soundness of the banking and insurance sectors and ensure continuing resilience

Ensure firms remain well-capitalised, maintain strong liquidity and stable funding profiles, and have robust operational resilience against cyber risks, though the implementation of Basel 3.1, Strong and Simple and operational resilience requirements.

Priority 2: Be at the forefront of identifying new and emerging risks, and developing international policy

Identify and monitor emerging risks from geopolitical trends, economic and financial market developments.
Monitor sector-wide resilience to build a clearer understanding of how private markets behave under severe but plausible stress and simulation exercises.

Priority 3: Support competitive, dynamic and innovative markets, alongside facilitating international competitiveness and growth

Further streamline regulatory reporting for banks though the Future Banking Data (FBD) Programme.
Provide tailored support for fast-growing and innovative financial firms and support the concierge service for new inbound international firms.

Priority 4: Run an inclusive, efficient, and responsive regulator within the central bank

Support both regulated firms and the wider economy though efficient regulation, including the timely handling of regulatory transactions.
Improve its regulatory processes though the adoption of emerging technology tools to increase efficiency and productivity.

Supervision Priorities for Banks

Topic	Priority
Implementation of the Basel 3.1 standards	The Basel 3.1 standards will take effect on 1 January 2027, which aims to support the resilience of the UK banking system by recalibrating the capital to better reflect the risks that they take, without incurring an increase in overall requirements for the sector. The PRA will continue to support firms' implementation of the final rules by finalising the outcomes of an off-cycle review of firm-specific Pillar 2 capital requirements – the initial submissions for which were collected by 31 March 2026 – prior to 1 January 2027, as well as monitoring the implementation of the market risk internal model approach in other major jurisdictions ahead of planned UK implementation on 1 January 2028.
Implementation of the Strong and Simple framework for Small Domestic Deposit Takers (SDDTs)	The PRA's Strong and Simple initiative significantly simplifies the prudential framework for eligible small, domestic-focused banks and building societies, while maintaining their resilience. In January 2026, the PRA finalised the SDDT regime, confirming the simplified capital regime with additional simplifications to liquidity requirements – find out more here. As for the Basel 3.1 firms, the PRA intends to finalise the outcomes of the off-cycle review of firm-specific Pillar 2 capital requirements and expectations for SDDTs. The reporting requirements for the SDDT capital regime will also take effect from 1 January 2027.
Climate change	As set out in SS5/25, firms are expected to review their status and be able to demonstrate a credible and ambitious timetable to address any gaps from June 2026. The PRA will continue to support industry through chairing the Climate Financial Risk Forum, which helps firms by developing guidance and scenario analysis tools. Read our article on the key changes announced in PS25/25 here, and find out more about the 41 expectations that non-systemic banks will need to proportionately consider. We also sponsored a recent webinar with UK Finance on climate risk for non-systemic banks, which you can watch on demand here.
Modernising the liquidity risk framework	Based on the expectations set out in consultation paper (CP) 5/26 – Modernising the liquidity risk framework, the PRA will continue to use its regular programme of Liquidity Supervisory Review and Evaluation Processes (L-SREPs) to assess firms' liquidity and funding risks and engage on firms' access to the Bank's Sterling Monetary Framework. Read our earlier article for the key details.
Operational risk and resilience: Managing cyber risks, risk from material third parties and enhancing operational resilience	The PRA will focus on firms' dependencies on third parties. In March 2026, the PRA published final policy on operational incidents and outsourcing and third-party reporting, which will come into force in March 2027 – read about it here. Furthermore, the PRA will continue to work with the FCA to advance the new regime for Critical Third Parties to mitigate risks and vulnerabilities arising from systemic third-party dependencies. The joint PRA-industry sector-wide exercise, SIMEX26, will focus on the impacts of an extended outage at a major third-party technology provider. In 2026/27, the PRA will continue to review systemic firms' operational resilience self-assessments to assess their cyber resilience capabilities to respond and recover from severe but plausible disruptions. This will also provide supervisory insights to prioritise work in this area.
Updating regulatory thresholds	Following industry feedback and internal analysis, the PRA will continue to develop a systematic approach for updating regulatory thresholds, including potential automatic indexation, to ensure prudential requirements remain proportionate. The consultation on the proposed approach would be published in H2 2026.
The FPC's assessment of bank capital requirements	Following the FPC's judgement that the appropriate benchmark for system-wide Tier 1 capital requirements was around 13% of risk-weighted assets (down from 14%), the PRA will support the further assessment of capital framework in relation to the leverage ratio, capital requirements linked to domestic exposures and buffer usability.
Non-bank financial institutions and private credit	The PRA considers counterparty credit risk (CCR) management remains a supervisory priority, particularly in relation to banks' growing exposures to non-bank financial institutions (NBFIs), where relationships are increasingly complex, given the gaps in data quality, availability and aggregation. The PRA will continue to assess firms' ability to maintain an accurate, timely understanding of exposures under both current and stressed conditions, with particular attention to private markets, hedge funds and other NBFIs with similar risk characteristics, through the Bank of England's (BoE's) second system-wide exploratory scenario exercise.
Ring-fencing review	The PRA would continue working with HMT on its review of the ring-fencing regime, to assess the interaction between the legislation and PRA rules, as well as options for ring-fenced bodies to provide more products and services flexibly.
Treatment of residential mortgage exposures under the internal ratings based (IRB) approach to credit risk	In July 2025, the PRA published discussion paper (DP) 1/25 – Residential mortgages: Loss given default (LGD) and probability of default (PD) estimation, which sets out potential options for addressing the barriers that medium-sized firms may face in developing IRB models for LGD and PD estimation. DP1/25 closed in October 2025, and the PRA intends to consult on policy proposals later in 2026/27.
Prudential treatment of cryptoasset exposures	The PRA is committed to ensuring the safety and soundness of firms engaging with cryptoassets, recognising both the opportunities for market efficiency and the unique risks posed by this rapidly evolving sector. Furthermore, the PRA is closely engaged with the Basel Committee on Banking Supervision's (BCBS) targeted review of elements of the international standard for the prudential treatment of cryptoasset exposures and plans to consult on the implementation of the BCBS standard once it is completed.

‍Other Updates

‍IMF Financial Sector Assessment Program (FSAP)

‍The BoE will lead the UK authorities’ response and input into the FSAP during 2026/27, with the outcome of the assessment expected to be published in mid-2027.

‍System-wide exploratory scenario exercise

Following the publication of the second system-wide exploratory scenario, the PRA will work with the BoE to assess how banks, insurers and non-banks active in private markets might adjust their portfolios, funding and valuation practices in a global stress, including analysis of amplification channels, interaction between leveraged finance, liquidity dynamics and interconnected exposures.

Approach to recognising overseas regimes

The PRA is working with HMT as equivalence regimes in assimilated law are restated and modified as Overseas Prudential Requirements Regime (OPRR) and intends to put in place the policy and rule changes that will facilitate HMT’s OPRR for deposit takers and designated investment firms in 2026/27 – we wrote about this back in February.

‍Developments in the mutuals’ regulatory framework

During 2026/27, the PRA and FCA intend to review the credit union regulatory framework, exploring more risk‑based prudential requirements for larger, more complex firms while enhancing proportionality for smaller credit unions.