Financial Policy Committee’s leverage ratio framework
This consultation seeks to gather the opinions of stakeholders and other interested parties concerning the leverage ratio framework that the Financial Policy Committee (FPC) has recommended it be granted new powers of direction over.
In light of international developments, the Chancellor judged that it was an appropriate time for the FPC to consider all outstanding issues relating to the leverage ratio and on 26 November 2013 requested that the FPC undertake a review of the leverage ratio and its role in the regulatory framework.
Following almost a year of work and extensive consultation with stakeholders, on 31 October 2014 the FPC published its recommendations to HM Treasury. Specifically, the FPC recommended that it be granted powers of direction over the Prudential Regulation Authority to set leverage ratio requirements and buffers including:
- a minimum leverage ratio requirement
- a supplementary leverage ratio buffer that will apply to G-SIBs and other major domestic UK banks and building societies, including ring-fenced banks
- a countercyclical leverage ratio buffer
This consultation aims to gather views on the government’s proposed implementation of the FPC’s recommendations regarding a leverage ratio framework.
Who should read thisWe would like to hear from institutions that would be affected by the FPC’s proposed powers of direction (i.e. PRA-regulated banks, building societies and investment firms) and associated bodies. We would also welcome responses from all parties interested in the capital requirements for financial institutions.