The Prudential Regulation Authority wants to replace repeated ad hoc upratings of fixed monetary thresholds with a single automatic framework. Its consultation identifies 128 thresholds across banking, insurance and credit unions that would rise with cumulative UK nominal GDP.[1][2]
The first automatic adjustment would take effect on 1 July 2031, based on growth from 2027 through 2029, with later updates every five years. The proposal is intended to prevent “prudential drag”: firms crossing old nominal thresholds because prices and the economy have grown rather than because their relative risk has materially changed.[2]
Proposed threshold population
| Policy bucket | Thresholds | Share |
|---|---|---|
| Regulatory perimeter or definition | 31 | 24%Source 2 |
| Reporting | 52 | 41%Source 2 |
| Governance, policies and procedures | 8 | 6%Source 2 |
| Methodologies and approaches | 25 | 20%Source 2 |
| Lending, funding and investment flexibility | 12 | 9%Source 2 |
Range and timetable
| Measure | Value | Context |
|---|---|---|
| Largest cited threshold | £320bn | Total-assets threshold for detailed capital reporting.Source 1 |
| Smallest cited threshold | £7,500 | Amount owed to a credit union by an individual.Source 1 |
| First effective update | 1 July 2031 | Outcome communicated by 31 December 2030 under the proposed timetable.Source 2 |
| Later frequency | Every 5 years | Subsequent examples are 2036 and 2041.Source 2 |
| Consultation deadline | 7 February 2027 | Applies to the consultation and discussion-paper feedback.Source 2 |
How the formula would operate
Proposed indexation mechanics
| Element | Treatment | Reason |
|---|---|---|
| Index | UK nominal GDP | Captures real activity and economy-wide price growthSource 1Source 2 |
| Direction | Increase only | A fall in nominal GDP would not reduce thresholdsSource 2 |
| Rounding | Two significant figures | Avoids false precision and keeps values usableSource 2 |
| Base framework | Common 2026 reference with transition rules | Aligns thresholds introduced at different timesSource 2 |
| Legal update | Automatic Rulebook mechanism | Later indexation would not require a fresh consultation each cycleSource 2 |
The increase-only floor preserves the existing threshold when nominal GDP falls. Rounding then converts the indexed calculation into a value firms can apply. In the PRA’s illustration, 12.2% growth takes a £100 billion threshold to £112.2 billion before rounding and £110 billion at two significant figures. A firm close to a boundary therefore needs the published rounded value, rather than an unrounded GDP projection.[2]
The effect depends on what each threshold controls
Some thresholds determine when stricter requirements begin, so raising them can delay entry into a more burdensome regime. Others operate in the opposite direction: increasing the value can raise a requirement or reduce flexibility. The PRA says it assessed individual thresholds for suitability rather than assuming every increase benefits the affected firm.[2]
The proposed population spans banks, building societies, designated investment firms, insurers, credit unions and some third-country branches. Groups approaching a regime boundary can also be affected. Percentages, counts, statutory values and thresholds requiring further policy judgement can be excluded; firms expanding faster than the wider economy can still cross an indexed threshold.[2]
The common cycle would let firms coordinate related system, reporting and governance updates. Outcomes for the first round would be published by 31 December 2030 before taking effect on 1 July 2031, leaving roughly six months to implement the values. The five-year interval also means the adjustment arrives as a periodic step rather than a continuous annual change.[2]
Responses are due by 7 February 2027 on the framework and associated discussion-paper questions. Existing thresholds remain in force while the PRA decides the final population and methodology. If adopted, later indexation rounds would apply that agreed method without reopening the underlying policy judgement through a fresh consultation each time.[2]
Sources & further reading
- Regulatory thresholds set to shift to automatic increases Bank of England / Prudential Regulation Authority · 7 Oct 2026 · Accessed 16 Oct 2026
- CP13/26: Updating regulatory thresholds—an autopilot approach Bank of England / Prudential Regulation Authority · 7 Oct 2026 · Accessed 16 Oct 2026