Which entity typically handles the prudential regulation of financial firms in the UK?

Which entity typically handles the prudential regulation of financial firms in the UK?

• A. Bank of England oversees all regulation.
• B. The Financial Conduct Authority (FCA) is the sole regulator.
• C. Prudential Regulation Authority (PRA).
• D. The Financial Ombudsman Service (FOS).

Answer: (C)

Prudential regulation focuses on the financial strength and risk controls of firms to keep the financial system safe. In the UK, this is handled by the Prudential Regulation Authority, which is part of the Bank of England. The PRA sets requirements around capital, liquidity, governance, and risk management for banks, insurers, and other major firms to ensure they can absorb losses and continue operating during stress. The Financial Conduct Authority, by contrast, is focused on how firms treat customers and run markets, not on their financial strength. The Financial Ombudsman Service deals with resolving customer complaints, not regulatory oversight. The Bank of England is the overarching institution for financial stability, but the day‑to‑day prudential regulation is carried out by the PRA.

Prudential regulation focuses on the financial strength and risk controls of firms to keep the financial system safe. In the UK, this is handled by the Prudential Regulation Authority, which is part of the Bank of England. The PRA sets requirements around capital, liquidity, governance, and risk management for banks, insurers, and other major firms to ensure they can absorb losses and continue operating during stress. The Financial Conduct Authority, by contrast, is focused on how firms treat customers and run markets, not on their financial strength. The Financial Ombudsman Service deals with resolving customer complaints, not regulatory oversight. The Bank of England is the overarching institution for financial stability, but the day‑to‑day prudential regulation is carried out by the PRA.