What is the Prudential Regulation Authority?

You wouldn’t trust your money with just anyone, right? When you deposit a check into your account or sign the dotted line when committing to a loan, you expect your money will be handled safely and retain its value. Well, banks also need to be held accountable for our funds, and that’s where the Prudential Regulation Authority comes in.

According to the Bank of England, the PRA is a firm that acts like a financial and regulatory watchdog that oversees the safe handling of finances. The PRA creates clear guidelines and procedures for banks to follow to ensure the safe handling of all finances and financial information. Not only does it create clear policies and behavior expectations for banks, but it also looks out for both your cash and the bank’s functions. It does this by practicing PRA Operational Resilience, an overarching framework to identify, mitigate and respond to possible disruptions.

The PRA was created following the financial crisis in 2007 as a regulatory service that supervises around 1,500 financial institutions including banks, credit unions, major investment firms, building societies and insurers. While banks are still businesses that are expected to make a profit, they have an added responsibility to its customers to maintain their financial health and stability. That is no small task. The PRA’s oversight helps hold banks accountable for your financial life and exhibit safe practices and principles that not only allow safe operation, but also limit the risk of banks falling into potential financial difficulty or instability.

To do this, the PRA practices risk management and operational resilience to ensure banks and firms operate as usual and consumer expectations are satisfied. Afterall, you expect your financial information to be secure, payments to go through without a hitch, and transactions to be completed in a timely matter. Disruptions to these basic delivery procedures would result not only with unhappy consumers and stakeholders, but also an overall dip in brand value and loss of consumer faith in the banks.

The PRA knows how seriously individuals take their funds and the trust they place within the banks. That’s why the PRA must carefully safeguard every aspect of business to ensure daily operations are continuing with efficiency and safety. With the growing global market and constant advancement in technological applications, including software, payment transactions, banks and their stakeholders must always identify potential threats within its existing infrastructure and carefully prepare its responses.

The PRA takes operational resilience seriously. It is constantly foreseeing possible issues, data breeches, disruptions to delivery systems, IT issues and any other severe and plausible disturbance to operations as well as how to resolve and adapt to those problems. Equally important to the identification of threats, the PRA must also respond, recover and learn from those disturbances to ensure they will not happen again.

The PRA prioritizes operational resilience to make certain they are prepared for when things go wrong, and they are able to bounce back quickly when they do.