Summary

  • The PRA’s CP10/26 consultation on ring-fenced-bank shared services closed on 14 October; the regulator has not yet published an outcome or adopted the proposed deletions.
  • The test is whether later continuity controls can protect critical services without relying on the same provider-boundary rules. That question is separate from HM Treasury’s legislation programme and the Financial Services and Markets Bill now in Parliament.

The deadline has passed, but the policy has not. The Prudential Regulation Authority (PRA) asked for responses to consultation paper CP10/26 by 14 October 2026. The paper proposes deleting rules 9.1, 9.2 and 9.3 from the Ring-fenced Bodies Part and revising related supervisory guidance. It describes a proposal for finalisation in 2027, not a change already in force. The PRA has not reported how many responses it received or what they said.

The three provisions address the service boundary in different ways. Rule 9.1 limits a ring-fenced body’s regular operational services from group companies, except through a dedicated service company. Rule 9.2 is designed to prevent services connected with core deposit-taking from being interrupted because another group member acts, fails to act or deteriorates financially. Rule 9.3 provides a narrow route for certain supplier-chain arrangements. Removing them would alter a specific set of constraints, not abolish ring-fencing as a whole.

The PRA’s case is that continuity objectives can now be addressed through a more flexible combination of later-developed controls. Its draft points to Operational Continuity in Resolution (OCIR), Operational Resilience, and Outsourcing and Third Party Risk requirements. The regulator argues these frameworks can focus attention on whether a critical service remains available under stress, rather than prescribing one organisational route for providing it. The proposal would still retain the arm’s-length requirement for intragroup transactions; it does not open a general channel for unconditioned financial support across the ring-fence.

That is a shift from one kind of assurance to another. A provider boundary is comparatively visible: supervisors can ask who supplies a service and whether a permitted structure is being used. A continuity framework asks harder operational questions: which services must keep running, what dependencies sit behind them, who can make decisions when a group is under strain, and whether records, people, systems and contracts can travel through a resolution. The PRA’s argument is that the latter is more adaptable. The published proposal does not, by itself, demonstrate that every firm’s arrangements meet that test.

Existing policy already treats continuity as a resilience problem. In SS4/21 on OCIR, the PRA addresses continued access to services through resolution and says ring-fenced bodies should have regard to the Ring-fenced Bodies Part when implementing OCIR. It is therefore not a choice between continuity and no continuity rule. The live issue is whether the overlapping controls provide a clear and enforceable chain after the three provisions are removed.

Timing matters. The PRA’s March 2026 update to SS2/21 on outsourcing and third-party risk is published but takes effect on 18 March 2027. It covers governance, subcontracting, business continuity and exit planning. That future effective date should not be mistaken for the current status of the Chapter 9 rules, or for the outcome of CP10/26. Any final design will have to make the handoff between old obligations, proposed deletions and incoming requirements legible to firms and supervisors.

There is a second track. HM Treasury’s Ring-Fencing Review, published on 18 May, said the government would retain ring-fencing while pursuing changes for flexibility and growth through primary legislation, secondary legislation and the PRA Rulebook. The related HMT consultation closed on 8 September and addressed a different set of statutory and secondary-legislation questions. Its deadline was not the PRA’s October deadline.

The Financial Services and Markets Bill tracker records completion of the Lords stages and a Commons first reading on 15 September; a Commons second-reading date remains to be announced. The Bill’s progress does not enact the PRA proposal, and the consultation does not decide the Bill. Treating them as one reform timetable would blur who is deciding which safeguards, through which instrument, and when.

For banks and their critical-service providers, the practical question is evidential. A firm may need to show how a service is mapped, how dependencies and subcontractors are known, what arrangements preserve access during group distress, and how an orderly transfer or exit would work. These are questions implied by the named control frameworks, not a claim that CP10/26 already imposes a new checklist on each firm. The regulator’s final text and supervisory decisions will matter.

The consultation’s end therefore starts a review phase rather than closing the issue. The outcome will reveal whether respondents view the wider controls as equivalent, more usable, or too diffuse to replace the service-specific rules. Until the PRA publishes its decision, the old requirements remain the reference point; the government’s broader statutory path continues on its own timetable.

Sources: PRA CP10/26; HMT review; HMT consultation; Bill stages; SS4/21; SS2/21 update.