The Financial Policy Committee is the Bank of England body responsible for spotting and responding to risks to the whole UK financial system.
Last reviewed: 1 July 2026
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REGULATIONS |
The Financial Policy Committee (FPC) is a Bank of England body responsible for identifying and reducing risks to the stability of the UK financial system as a whole, rather than the soundness of any single firm.
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KEY FACTS
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What system-wide risk actually means
Rather than checking whether one bank or insurer is financially sound, the FPC looks at risks that could affect the whole system, such as excessive household debt, an overheated housing market, or interconnected risks between large financial institutions. A problem at a single small firm is a PRA concern; a problem that could spread across the system is an FPC concern.
Tools the FPC can use
The FPC can recommend or direct measures such as limits on how much banks can lend relative to a borrower's income, or additional capital buffers for the banking sector during periods of high risk. These tools are aimed at reducing the chance of a system-wide crisis rather than protecting any one customer or firm.
Examples of FPC tools
| Tool | What It Does |
|---|---|
| Loan-to-income limits | Caps the proportion of high loan-to-income mortgage lending banks can do |
| Countercyclical capital buffer | Requires banks to hold extra capital during periods of high system-wide risk |
| Stress testing requirements | Requires banks to model their resilience to severe economic scenarios |
FPC vs MPC vs PRA
| FPC | MPC | PRA | |
|---|---|---|---|
| Scope | Whole financial system | UK-wide inflation | Individual firms |
| Main tool | Capital buffers, lending limits | Bank Rate | Firm-level capital rules |
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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 Financial Policy Committee the same as the Monetary Policy Committee?
No, the Monetary Policy Committee sets the Bank Rate to control inflation, while the Financial Policy Committee focuses on risks to financial stability. They are separate committees with separate objectives.
Can the FPC affect mortgage lending rules?
Yes, the FPC can recommend or direct limits on mortgage lending, such as caps on high loan-to-income lending, if it judges this necessary to reduce system-wide risk.
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Related Guides |
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