UK prudential regulator delays Basel 3.1 again, pauses data collection request

On January 17, the Prudential Regulation Authority (PRA) delayed the implementation date for Basel 3.1 until January 2027 — the second such delay in five months. The regulator also paused indefinitely a data request that firms have been working on since September.

In a statement, the PRA cited “current uncertainty” over what the incoming Trump administration will do about implementing the regime as the reason for the additional 12-month delay.

Chancellor of the Exchequer Rachel Reeves said in her Mansion House speech last November that rules introduced in the wake of the 2008 global financial crisis (GFC) had “gone too far”. At a meeting last Thursday, she also called on regulators to “tear down” regulatory barriers.

John Cronin, founder of research and analysis firm SeaPoint Insights, said further changes to the PRA’s Basel 3.1 plans could be on the way.

“I see the delay to the implementation of the Basel 3.1 reforms as a prelude to further dilution of the rules. In overall terms it is welcome from an industry perspective and it is still the case that capital requirements have been tightened materially since the GFC,” said Cronin, who has covered the UK banking sector for many years.

Despite the further one-year delay to commencing implementation, the PRA said it was shortening the length of time it will give firms to implement the Basel 3.1 regime in order to maintain the January 1, 2030 deadline for full implementation.

In a letter to UK Prime Minister Keir Starmer written before Friday’s announcement, but published this morning, PRA chief executive Sam Woods said that the UK had a responsibility to implement the regulation.

“This is not a domestically driven change but an international reform in which we need to play our part in order to maintain both stability in the event of shocks and the UK’s reputation as a responsible host of a very large global financial centre,” Woods said in his January 15 letter.

Pillar 2 data request

Alongside the announcement of a delay to implementation, the PRA also said it was pausing a data collection request. The move will irritate chief executives at financial firms, many of whom have been vocal in questioning the volume and need for such requests from regulators at recent hearings held by the House of Lords Financial Services Regulation Committee.

Cronin said it was likely firms will have incurred costs preparing to comply with the now paused request. However, he added, “it is not necessarily wasted as this exercise will potentially be reignited in due course”.

“Furthermore, I suspect that directly related costs have not been enormous. In overall terms I think the banking sector welcomes both this development and the wider delay to the introduction of the Basel 3.1 reforms,” Cronin said.