UK CRR/CRD IV

Find out about the UK’s prudential regime for banks, building societies and investment firms.

The UK's prudential regime for banks, building societies and certain investment firms consists of:

  • the UK legislation and rules implementing the Capital Requirements Directive (UK CRD IV)
  • the Capital Requirements Regulation (575/2013) as amended by the Capital Requirements (Amendment) (EU Exit) Regulations 2018 (UK CRR)

In addition, there are a range of technical standards and non-binding guidelines that complete the legislative package. 

The Capital Requirements Directive (CRD IV) was implemented into UK law primarily through our, and the Prudential Regulation Authority (PRA), rulebooks. We have made the necessary amendments to our Handbook, including all our prudential sourcebooks, and the Treasury has amended the UK CRR, to make sure that they continue to operate effectively following Brexit. 

A key aim of the UK CRR/CRD IV is to provide enhanced requirements for:

  • the quality and quantity of capital
  • a basis for new liquidity and leverage requirements
  • rules for counterparty risk
  • macroprudential standards including a countercyclical capital buffer and capital buffers for systemically important institutions

The UK CRR/CRD IV also:

  • made changes to rules on corporate governance, including remuneration
  • introduced standardised regulatory reporting, referred to as COREP and FINREP. These reporting requirements specify the information firms must report to supervisors in areas such as own funds, large exposures and financial information

The UK CRR/CRD IV strengthen the prudential framework for individual institutions and respond to financial stability concerns that arose during the 2008 financial crisis. 

On this page:

Firms affected by the UK CRR/CRD IV 

We are responsible for the prudential regulation of nearly all investment firms in the UK that are subject to the UK CRR/CRD IV requirements. Among others, these include:

  • brokerage firms
  • sole traders
  • broker dealers
  • commodities traders
  • spread betters 
  • asset managers

The PRA is responsible for applying the requirements of the UK CRR/CRD IV to the firms it regulates, such as banks, building societies, and a small number of large investment firms.  

When the CRD IV was initially implemented in the UK, there was a competent authority discretion (under Article 95(2) of the CRR) available for certain investment firms to stay on the previous Capital Requirements Directive rules (which were transposed domestically via BIPRU sourcebook for banks, building societies and investment firms) rather than move to the UK CRR/CRD IV. 

We have carried over this discretion in the UK CRR/CRD IV. Therefore, some firms will continue to be subject to BIPRU/GENPRU as it stood on 31 December 2013 (subject to amendments resulting from Brexit). This applies to MiFID firms that: 

  • don’t hold client money or assets
  • carry on the MiFID services of portfolio management and/or execution of orders on behalf of clients; and
  • may carry on the MiFID services of investment advice and/or reception and transmission of orders, but do not carry on any other MiFID activities

FCA firms that benefit from this discretion should continue to submit their existing regulatory returns as opposed to submitting the UK CRR financial reporting requirements (COREP and FINREP).

All other firms subject to the UK CRR/CRD IV are subject to the sourcebook, IFPRU. This has been amended to make sure that it works effectively following Brexit. We also made changes to the Systems and Controls sourcebook to ensure our Handbook is consistent with the UK CRR/CRD IV.

Firms can continue to identify whether they are IFPRU or BIPRU/GENPRU by using Chapter 6 of our Consultation Paper.

UK CRR/CRD IV 

Legacy policy statements and consultation papers:

Brexit policy statements and consultation papers with respect to the UK CRR/CRD IV 

  • CP18/28 and CP18/36 on proposed changes to the Handbook and BTS
  • CP18/29 on a temporary permissions regime for inbound firms and funds 
  • CP19/2 on Brexit and contractual continuity
  • CP18/34 on regulatory fees and levies
  • PS19/5 Brexit Policy Statement and Transitional Directions

Binding Technical Standards (BTS) 

All of the relevant BTS mandates for CRD IV and CRR have been brought into UK law, with responsibility for meeting these mandates transferred to us and the PRA. We and the PRA have corrected deficiencies in the CRD IV/CRR BTS so that they operate effectively following Brexit.  

For details of changes to the relevant BTS, please refer to our publications page for the relevant consultations and Policy Statements that we have issued. 

EU Level 3 material

In CP18/28 and CP18/36, we explained our approach to a broad range of non-legislative materials produced by the European Supervisory Authorities (ESAs), known as EU Level 3 material. 

It was decided not to incorporate the EU Level 3 material into UK law. Nevertheless, we consider that the EU non-legislative material remains relevant after the UK’s withdrawal from the EU. Therefore, we expect financial institutions and other market participants to continue to apply ESA Guidelines and Recommendations as they did before Brexit, taking into account any changes that result from the onshoring process.

Liquidity modification by consent

Following the UK’s exit from the EU, our onshoring amendments have deleted whole firm liquidity modifications from our BIPRU rules. 

However, the effect of the application of our direction made under the Financial Services and Markets Act 2000 (EU Exit) Regulations 2019 (FCA prudential transitional direction) will be to preserve these waivers for the duration of the direction.

Find out more about liquidity modification by consent.

Pillar 2 and SREP

Our supervisory approach to Pillar 2 continues to align with the European Banking Authority's (EBA's) Guidelines on common procedures and methodologies for the supervisory review and evaluation process (SREP GLs).

We expect financial institutions and other market participants to continue to apply the SREP GLs as they did before Brexit.

We have published a Pillar 2 Summary Note that highlights some aspects of existing Pillar 2 policy arising from our original implementation of CRD IV and, specifically, as a consequence of the publication of the EBA SREP GLs.

It provides examples to help understanding of Pillar 2 policy in the context of the UK CRD IV. These principles apply equally to firms that are subject to, or not subject to, the UK CRD IV, but are subject to Pillar 2.

Supervisory reporting

The CRR and corresponding technical standards introduced an EU harmonised supervisory reporting framework, referred to as COREP (supervisory reporting templates) and FINREP (financial reporting templates). 

UK CRR retains the supervisory reporting framework for Financial Reporting (FINREP) and Common Reporting (COREP).

Visit our UK CRR reporting pages for more information on supervisory reporting under UK CRR, including technical information and updates on COREP/FINREP.

Residential mortgages

UK CRR/CRD IV allow preferential capital treatment for credit risk in relation to certain types of residential mortgage exposures, if the underlying residential property market has long-standing positive characteristics.

For more information on how this requirement is met in the UK, see property loss rates.

Transfer of functions from the European Supervisory Authorities (ESAs)

Following Brexit, under the UK CRR and the Financial Conglomerates and Other Financial Groups (EU Exit) Regulations 2018 (UK FICOD), certain activities and functions have been transferred from the ESAs to us and the PRA. 

Specifically, the following publishing obligations have been transferred to us and the PRA from the EBA:

  • list of External Credit Assessment Institutions (ECAIs) – Article 135(2) of UK CRR
  • list of eligible Common Equity Tier 1 (CET1) capital instruments – Article 26(3) of UK CRR
  • list of financial conglomerates – Article 4(3) of UK FICOD

We and the PRA are jointly responsible for updating and publishing these lists. 

While the list of ECAIs will be published directly on our website, the list of CET1 capital instruments and list of financial conglomerates can be accessed via the PRA’s website.