the pra's future approach to policy − speech by vicky saporta given at the city & financial global event published on 27 september 2022 vicky explains how regulation that is strong and responsive can avoid unnecessary trade - offs between competitiveness and resilience. the financial services and markets bill 2022 introduces new powers and a new secondary objective on competitiveness and growth for the pra. vicky argues that the pra can use these new powers to regulate responsively, and better tailor rules to the needs of the uk. vicky sets out the pra ’ s intention to take a proactive approach to the new objective. she explains that as a global financial hub, the uk ’ s competitiveness in financial services rests on its skilled workforce, and its deep and specialised markets. vicky argues that the uk economy has more to gain by having a regulatory regime that is open to international business, nondiscriminating, predictable, transparent, responsive to threats and opportunities rather than in weakening standards to attract business. speech introduction the government ’ s financial services and markets bill introduces important changes to the pra ’ s powers and responsibilities. it does so to implement reforms identified by the future regulatory framework for financial services review, or the ‘ frf review ’. the reforms will move financial regulation back to a british style of regulation based on the financial services and markets act of 2000, which we refer to as ‘ fsma ’. most technical rules will be made by regulators accountable to parliament. this will broaden rule - making powers for the pra, as requirements which are now in statute will be replaced by new elements of our rulebook, which we will have the power to change. the fsm bill also introduces a new objective. the pra ’ s primary objectives will remain the safety and soundness of firms and, for insurers, an appropriate degree of protection for policyholders. we will keep our existing secondary objective to facilitate effective competition in markets for financial services. but alongside these we will have a new secondary objective to facilitate, subject to alignment with relevant international standards, the international competitiveness of the uk ’ s economy and its growth in the medium to long term. we know it is important that we explain what we think these changes will mean for our policymaking. we also want to hear how other people think we should approach our objectives and use new powers. that is why on 8 september we published a discussion paper setting out our vision for the pra as a strong

, accountable, responsive, and accessible rule maker. today i am going to explain how those principles will guide us as we seek out new opportunities to pursue all our objectives ; including competition, competitiveness, and growth. in particular, i will explain how rules that are strong and responsive can protect resilience and facilitate competitiveness at the same time. taking our new competitiveness objective seriously will not mean entering a regulatory race to the bottom. instead, we will make rules that allow the uk economy to benefit the most from the uk ’ s strengths as a leading financial centre without compromising on safety and soundness. good regulation is like an effective immune system i ’ m going to start with an idea about what makes prudential regulation good. good prudential regulation is a bit like an effective immune system. an immune system is strong and responsive. it is strong to protect against threats, and responsive to fight new risks. indeed it is strong because it is responsive. its strength is a consequence of its ability to change so that it can identify, contain, and control new threats to our wellbeing, without getting in the way of what works well. it remembers previous threats. it is easy to take it for granted until something overcomes its defences. when that happens, the consequences can be devastating. good prudential regulation is very similar. it stays strong by adapting when shocks hit the economy, such as when we acted at the start of the pandemic to ensure that the financial system delivered services for households and businesses to support the real economy at all times, good and bad. [ 2 ] good prudential regulation also responds when innovation changes the way finance works. that is why, for example, we have clarified expectations about how firms should manage risks from cryptoassets and why, with the fca, we set up and chaired the artificial intelligence public - private forum to help us better understand the impact of artificial intelligence and machine learning on financial services. [ 3 ] it is also why we published this july, with the fca and bank as financial markets infrastructure regulator, a discussion paper on critical third parties proposing proportionate measures to strengthen their resilience in a manner that supports the openness of the uk as a financial centre. [ 4 ] good prudential regulation also changes to meet new sorts of risk, which is why we were amongst the first regulators globally to develop standards for operational resilience. it turns out that white blood cells that target