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PRA slams banks and insurers with £11m section 166 costs

PRA slams banks and insurers with £11m section 166 costs

The Prudential Regulation Authority (PRA) issued section 166 orders 33 times since it was set up last April hitting banks and insurers with £11.4 million costs.

In its first report and accounts for the 11 months to the end of February, the PRA said the number of section 166s rose from 27 the previous year although the cost of these fell from £14.7 million in 2012/13.

Nearly half or 16 of the section 166s focused on governance, controls and risk management frameworks, with eight on prudential matters for insurance, seven for deposit takers and clearing houses and two over data and IT infrastructure concerns.

The cost per report ranged from £14,602 to £1.3 million, compared to £33,795 to £3 million in the previous year.

‘Section 166 of FSMA provides a regulatory tool which gives the PRA the powers to obtain an outside expert view of aspects of a firm’s activities that, for example, cause concern or where further analysis is required,’ the banking regulator said.

Overall the PRA spent £202 million of its full year equivalent budget of £230 million. The biggest single cost was the BoE management fee of £59 million, followed by regulatory operations at £42 million, and banking and insurance supervision at £32 million and £30 million, respectively. Transition costs weighed in at £9 million. It has current assets of £33.1 million.

Looking more closely at the PRA, at the end of February, it had 1,045 staff and a staff turnover rate of 11.6% compared to 8.1% for the Bank of England in total. Chief executive Andrew Bailey (pictured) received total remuneration of £340,421 of which £253,127 was his base salary.

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