The Prudential Regulation Authority supervises UK banks, insurers, and major investment firms to keep them financially sound. Here is what it actually does.
Last reviewed: 1 July 2026
|
REGULATIONS |
The Prudential Regulation Authority (PRA) is part of the Bank of England and is responsible for the financial soundness of UK banks, building societies, credit unions, insurers, and major investment firms. Its focus is on whether these firms stay financially stable, not on how they treat individual customers.
|
KEY FACTS
|
What the PRA actually supervises
The PRA authorises and supervises deposit-takers such as banks, building societies, and credit unions, along with insurers and the largest investment firms. Its supervision is "prudential," meaning it focuses on whether a firm holds enough capital and manages risk well enough to remain solvent.
How the PRA differs from the FCA
The PRA and the FCA both regulate UK financial services but from different angles. The PRA is concerned with whether a firm is financially sound enough to meet its obligations. The FCA is concerned with how firms treat their customers and whether they compete fairly. Many firms, including most insurers, are dual-regulated by both bodies at once.
Why the PRA matters to policyholders
Because the PRA authorises and supervises insurers, its rules directly shape the Financial Services Compensation Scheme's insurance protection tiers. A firm must have been PRA-authorised for FSCS insurance protection to apply if it later fails.
PRA vs FCA at a glance
| PRA | FCA | |
|---|---|---|
| Focus | Financial soundness of firms | Conduct, competition, consumer protection |
| Part of | Bank of England | Independent public body |
| Firms supervised (approx.) | 1,500 | 42,000 |
| Handles individual complaints | No | Sets conduct rules; complaints go to the Financial Ombudsman Service |
| Established | 2013 (from the former FSA) | 2013 (from the former FSA) |
|
Firms supervised (approximate) PRA (banks, insurers, major investment firms): 4% FCA (all regulated financial firms): 100% |
|
Worked Example: A mid-size general insurer under dual regulation A UK general insurer is authorised by the PRA, which checks whether it holds enough capital to pay future claims, and by the FCA, which checks how it handles customer complaints and whether its policy wording is clear and fair. A firm can meet the PRA's capital requirements comfortably while still facing FCA enforcement action over how it treats customers, since the two regulators are assessing entirely different things. |
|
This article is general information, not financial or legal advice. Rules and limits can change: always check the current position with the regulator or scheme concerned before relying on any figure here. |
Is the PRA a government department?
No, the PRA is part of the Bank of England, which is a public body but operates independently of central government on day-to-day regulatory decisions.
Does the PRA handle individual consumer complaints?
No, individual complaints about how a firm treats a customer are generally handled by the Financial Ombudsman Service, not the PRA.
|
Related Guides |
|
Sources |
