PRA Business Plan 2026/27: Safety and Soundness, Reduced Headcount, and a Sharper Growth Agenda
Credit: Getty
The PRA's annual plan sets a reduced budget and headcount while confirming the regulatory pipeline through 2027, and what regulated firms can expect across banking, insurance and cross-sector work.
Context:
On 17 April 2026, the PRA published its Business Plan for 2026/27, the document that sets out the PRA's strategic priorities, regulatory workplan, and budget for the year ahead under section 2E of FSMA 2000. It is published alongside CP7/26 on fees and levies.
The 2026/27 Business Plan is set against a challenging backdrop: the Middle East conflict has created energy price volatility and inflation uncertainty; private credit markets are showing signs of stress; and the pace of regulatory reform, Basel 3.1, SMCR Phase 1, OPRR, FBD, and Solvency UK fine-tuning has been intense. The PRA's response is to confirm its continued focus on safety and soundness and policyholder protection, while pursuing a proportionate and efficiency-focused approach that reflects its secondary competitiveness and growth objective.
One of the plan's notable features is a projected headcount reduction: budgeted headcount is expected to fall in 2026/27 to 1,385 FTE from 1,527 FTE in 2025/26, a reduction of 142 FTE (around 9%). This reflects both efficiency improvements and the PRA's assessment that the post-crisis regulatory buildout is now mature, allowing some rationalisation of supervisory capacity. The PRA has emphasised that this will not reduce supervisory quality but will focus resources on the highest-impact firm interactions.
Rules and Guidelines:
The Business Plan confirms the following regulatory deliverables for 2026/27 in banking: Basel 3.1 implementation (effective January 2027); FBD programme consultation response and roadmap development; OPRR rulebook alignment (January 2027); SMCR Phase 1 final rules (mid-2026); biennial stress test (replacing annual tests); and potential consultation on capital buffer usability and leverage framework changes.
In insurance: the Life Insurance Stress Test (LIST) 2028 early indication has been published; the Dynamic General Insurance Stress Test begins in May 2026; the PRA will continue work on bulk purchase annuity (BPA) risk management; Solvency UK Own Funds (CP4/26) is under consultation with finalisation expected; and the Alternative Life Capital discussion paper (DP2/25) will inform further policy development.
Cross-sector priorities include: operational resilience (ongoing supervisory engagement against PS21/3 mapping and testing obligations); AI risk monitoring (joint FPC/FCA/PRA survey in 2026); climate risk (Supervisory Statement SS5/25 and climate scenario exercises); and the new Skilled Persons panel effective April 2026 (valid to March 2030).
Businesses Affected:
All PRA-regulated firms across banking, insurance, and investment. The Business Plan sets out the regulatory agenda they will be required to implement or engage with.
Senior management and board members who need to plan for the combination of Basel 3.1, SMCR reform, OPRR, and stress test obligations across a compressed 2026–2027 timeline.
Risk, capital, and compliance functions are responsible for implementing the multiple concurrent regulatory changes across credit risk, market risk, operational resilience, and climate.
Insurance firms specifically face a new general insurance stress test from May 2026 alongside the ongoing Solvency UK reform programme.
Next Steps:
Use the Business Plan as a regulatory horizon planning tool. Map all confirmed PRA deliverables in 2026/27 against your firm's implementation capacity and identify resource constraints.
Prioritise Basel 3.1 implementation (January 2027), as it affects capital, reporting, and risk management simultaneously, and the FRTB IMA delay to January 2028 should not reduce the pace of standardised approach readiness.
Engage with the PRA's biennial stress test design once announced, the shift from annual to biennial testing changes the capital planning cycle, and firms should adjust their internal stress testing programmes accordingly.
Prepare for the 2026 AI survey (joint FPC/FCA/PRA). Firms should document their AI use cases, governance frameworks, and dependency mapping now. The survey results will inform whether additional AI-specific regulatory tools are required.
Track the capital buffer usability and leverage the framework review. Any changes following the FPC's bank capital assessment (feedback closed April 2026) could affect capital planning assumptions across the banking sector.
Source | PRA | Business Plan 2026/27
