The Prudential Regulation Authority (PRA), the UK’s prudential regulator for banks, insurers and credit unions, has set out plans to link 128 regulatory thresholds to nominal gross domestic product (GDP), so they rise automatically rather than through occasional manual revisions.
The thresholds in question determine which rules a firm must follow, how those rules are applied, and what information it must submit to the regulator. Under the current approach, these figures are revised on an ad hoc basis. The PRA argues that indexing them would make the framework more proportionate, lower compliance costs for many firms, and give businesses greater certainty when planning ahead, removing obstacles to their expansion.
The figures covered vary widely in scale. At the top end sits the £320bn total assets threshold that triggers detailed capital reporting. At the other extreme is a £7,500 limit on what an individual may owe a credit union. Other notable thresholds within scope include the size at which an insurer falls under Solvency UK and the total assets limit for the Small Domestic Deposit Takers regime.
If adopted, the first adjustment would come into force on 1 July 2031, with subsequent revisions every five years. The regulator expects all firms to gain from the change, though small and medium sized firms sitting just below a threshold stand to benefit most. The PRA said this should strengthen competition, support economic growth and help firms continue providing services across the economy.
The PRA forms part of the Bank of England and oversees the safety and soundness of firms in banking, insurance and the credit union sector.
The regulator selected nominal UK GDP, which the Office for National Statistics publishes, as its benchmark because it reflects both inflation and real economic expansion. Alternatives such as the Consumer Price Index or real GDP growth capture only one of these factors. The five-year cycle was chosen to strike a balance between the cost to firms of frequent adjustments and keeping thresholds aligned with economic conditions. The PRA is seeking feedback on the full package.
Bank of England deputy governor for prudential regulation and PRA CEO Katharine Braddick said, “This modernisation will significantly help financial services firms plan for the future, offering crucial stability and predictability, while also preventing out of date thresholds becoming restrictive barriers to growth.”
Copyright © 2026 RegTech Analyst
Copyright © 2026 RegTech Analyst
