The PRA wants 128 regulatory thresholds to rise with nominal GDP
Victoria Shinder1 min readThe Prudential Regulation Authority proposed on 7 October that 128 regulatory thresholds across banking, insurance and credit unions should increase automatically with nominal GDP, replacing the manual, ad hoc updates used today.
What the thresholds do. They decide which rules apply to a firm, how they apply, and what it must report. The largest in scope is the £320 billion total-assets threshold for detailed capital reporting; the smallest is a £7,500 limit on what an individual may owe a credit union. Others include the size at which an insurer falls under Solvency UK and the total-assets threshold of the Small Domestic Deposit Takers regime.
The mechanics.
- Index: nominal UK GDP as published by the ONS. The PRA chose it because it captures both price changes and real growth, which CPI or real GDP alone would not.
- Frequency: every five years, to balance the cost of repeated adjustments against keeping thresholds in step with the economy.
- First update: 1 July 2031.
- Consultation: open from 7 October 2026 to 7 February 2027.
What is left out. Not every threshold is suited to automatic indexation. Some — mainly those where the PRA wants more industry input, and those owned jointly with the FCA — are in a parallel discussion paper instead.
Why. The PRA says automatic updates give firms certainty for business planning and stop out-of-date thresholds becoming barriers to growth. It expects the change to help small and medium-sized firms hovering under thresholds most. "This modernisation will significantly help financial services firms plan for the future," said Katharine Braddick, Deputy Governor for Prudential Regulation.
The policy shift. It is the prudential cousin of what the Fed's Michelle Bowman argued for in the US this week: thresholds indexed to the economy rather than frozen in statute or rulebook.