The Prudential Regulation Authority should consider where there is more that can be done to reduce the advantages from which large banks and insurers benefit through modelling their own capital requirements. The purpose of doing so would be not only to strengthen competition by reducing the barriers faced by smaller or newer firms, but also to assess whether firms modelling their own capital requirements are truly reflecting the levels of risk involved.

The Prudential Regulation Authority should consider where there is more that can be done to reduce the advantages from which large banks and insurers benefit through modelling their own capital requirements. The purpose of doing so would be not only to strengthen competition by reducing the barriers faced by smaller or newer firms, but also to assess whether firms modelling their own capital requirements are truly reflecting the levels of risk involved. Type: conclusion | Number: 23 | Paragraph: 154 | Response status: under_consideration Government response: We agree with the Committee’s recommendation that “regulators should make every effort to limit the costs of compliance with the rules… [but] should not let short-term costs or the views of market participants… limit the scale of their ambition when finding opportunities to genuinely simplify the re