CP8/25 – Regulated fees and levies: Rates proposals for 2025/26

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Responses are requested by Friday 9 May 2025.

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In the policy statement for this consultation, the PRA will publish an account, in general terms, of the representations made as part of this consultation and its response to them. In the policy statement, the PRA is also required to publish a list of respondents to its consultations, where respondents have consented to such publication.

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Responses can be sent by email to: CP8_25@bankofengland.co.uk.

Alternatively, please address any comments or enquiries to:
PRA Fees Policy Team
Financial, Planning, Performance & Analysis
Prudential Regulation Authority
20 Moorgate
London
EC2R 6DA

1: Overview

1.1 This consultation paper (CP) sets out proposals for the Prudential Regulation Authority’s (PRA) fees for 2025/26. The proposals would make amendments to the Fees Part of the PRA Rulebook (Appendix). The proposals include:

• the fee rates to meet the PRA’s 2025/26 Annual Funding Requirement (AFR);
• the introduction of a cost allocation to fund the PRA’s activities in the Future Banking Data project;
• changes to internal model application fees, the model maintenance fee, the Special Project Fee for restructuring, the minimum fee and the new firm authorisation fee for Type 3 applications;
• changes to the fees rules for firms applying to cancel before the start of the fee year;
• setting out how the PRA intends to allocate the surplus from the 2024/25 AFR (Chapter 3); and
• the retained penalties for 2024/25 (Chapter 4).

1.2 This CP is relevant to all firms that currently pay PRA fees or are expecting to do so within the 2025/26 fee year.^{footnote [1]}

1.3 The PRA has a statutory duty to consult when changing rules (FSMA s138J), or new standards instruments (FSMA s138S). When not making rules, the PRA has a public law duty to consult widely where it would be fair to do so.

1.4 In carrying out its policymaking functions, the PRA is required to comply with several legal obligations. The analysis in this CP explains how the proposals have had regard to the most significant matters, including an explanation of the ways in which having regard to these matters has affected the proposals.

Summary of proposals

1.5 The PRA’s AFR for 2025/26 is composed solely of the budgeted cost of Ongoing Regulatory Activities (ORA). Further information can be found in Chapter 2. The proposed ORA for 2025/26 is £328.7 million, a decrease of £2.6 million (0.8%) from 2024/25. This figure is provisional and may need to be revised when final estimates for the PRA’s costs are available (see Chapter 2 for further detail).

1.6 The PRA’s proposed Total Funding Requirement (TFR) for 2025/26 is £342.5 million, a decrease of £10.5 million (3%) from 2024/25 (£353.0 million). The TFR is composed of the AFR and other fees to industry.

Implementation

1.7 The PRA proposes to implement the changes resulting from this CP on Wednesday 2 July 2025.

Responses and next steps

1.8 This consultation closes on Friday 9 May 2025. The PRA invites feedback on the proposals set out in this consultation. Please address any comments or enquiries to CP8_25@bankofengland.co.uk.

1.9 When providing your response, please tell us whether you consent to the PRA publishing your name, and/or the name of your organisation, as a respondent to this CP.

1.10 Please also indicate in your response if you believe any of the proposals in this CP are likely to impact persons who share protected characteristics under the Equality Act 2010, and if so, please explain which groups and what the impact on such groups might be.

2: The PRA’s proposals

PRA Annual Fees consultation – 2025/26

2.1 This chapter sets out proposals on fee rates to meet the PRA’s TFR for 2025/26. Detailed information on the PRA’s strategy and workplan for the coming year, which will be funded by the TFR, is set out in the PRA Business Plan 2025/26, which is published alongside this consultation.

2025/26 Total Funding Requirement (TFR)

2.2 The TFR covers the PRA’s total fees and comprises the AFR and ‘other fees’ (see Table 2.A). The PRA’s TFR for 2025/26 is £342.5 million, a decrease of £10.5 million from 2024/25 (£353.0 million).

2025/26 Annual Funding Requirement (AFR) and comparison with 2024/25

2.3 The AFR is the budget required by the PRA to advance its statutory objectives. The PRA’s proposed AFR for 2025/26 is £328.7 million and is composed of the budget for the ORA.

2.4 The proposed AFR for 2025/26 is £2.6 million lower than the AFR for 2024/25 of £331.3 million, a decrease of 1%, which is mainly due to an expected reduction in costs allocated to the PRA due to a lower proportion of the Bank’s investment projects being directed to the PRA Levy.

2.5 The impact of external market conditions on the PRA’s pension costs for 2025/26 has yet to be fully confirmed. The figure for the ORA is therefore provisional and may need to be revised when final cost estimates are available.

Allocation of 2025/26 Ongoing Regulatory Activities (ORA) to fee blocks

2.6 The proposed allocation of the ORA across the seven PRA-authorised fee blocks, including the minimum fee block, is set out in Table 2.B. Firms are allocated to PRA fee blocks based on the regulated activities for which they hold permissions, with firms paying a periodic fee for each fee block into which they fall. The proposed allocation to fee blocks is based on an estimate of the anticipated work to be performed by the PRA within each area and reflects the PRA’s risk-based approach. The fee block allocation percentages are unchanged from 2024/25.

2.7 Within each fee block, the costs to be recovered from individual firms are based on the size of their business. The aim is to ensure that those firms that could potentially cause the greatest harm to the stability of the UK financial system are the main contributors to the PRA’s AFR. As for previous years, cost recovery within the A1 fee block is weighted further towards higher impact firms.

2.8 Any firm authorised to carry out any of the regulated activities covered by the ‘A’ fee blocks is also subject to the A0 minimum fee (except for the A6 fee block, which consists of the Society of Lloyd’s and its subsidiaries only) and is invoiced on an individual basis.

Online fees calculator

2.9 The Financial Conduct Authority (FCA) provides a facility on its website to enable firms to calculate their periodic fees for the forthcoming year based on the proposed PRA consultative rates (Appendix). The fee calculator for 2025/26 fees is expected to be available to firms from Thursday 10 April 2025.

Other fees

2.10 Other fees include cost allocations, the model maintenance fees, Special Project Fees for restructuring (SPF) and regulatory transaction fees. These fees vary from year to year and can lead to greater volatility in periodic fees. Additional context on the PRA’s approach to other fees can be found in SS3/16 – Fees: PRA approach and application.

2.11 For 2025/26, the PRA expects to raise £13.8 million in other fees, an increase of £4.1 million from 2024/25.

Cost allocation for Future Banking Data (FBD)

2.12 The PRA is proposing to introduce a cost allocation to fund the FBD programme. FBD is a new programme combining the Banking Data Review (BDR) and aspects of the Bank’s collaborative work with industry and the FCA on Transforming Data Collection (TDC). By clearly integrating and focusing the scope of these two strands of work, FBD aims to deliver tangible cost reduction in banking regulatory reporting in line with the PRA’s secondary competitiveness and growth objective, as well as improvements to the relevance, quality and timeliness of the data the PRA collects to fulfil its primary objective to promote the safety and soundness of banks. The project will draw on work carried out between 2021 and 2024 to streamline data collections for insurers.

2.13 To achieve this, FBD will build on the strong foundations of BDR and TDC and deliver the following focused programme of work in 2025/26:

• Consult on proposals for the deletion of underused or duplicative whole templates;
• Develop a firm-facing portal to facilitate interactions with the PRA, focusing on improving firms’ experience with data collections. Initially, the portal will provide the foundations to automate how the PRA collects data from PRA- regulated firms for certain authorisations purposes. The PRA receives authorisations-related applications from firms over a wide array of transactions, and the PRA will initially focus on where it can deliver the biggest benefits and unlock efficiencies for all involved. The PRA plans to extend the portal to wider authorisations data sets, as well as data collection use cases, in due course; and
• Collaborate with industry and the FCA, at both senior and working level, to shape the future strategy for FBD. Recognising the lessons learned so far across both BDR and TDC, the PRA will work closely with industry in developing a coherent approach to collections that can be maintained and evolve as risks emerge. The intended outcome will be a shared vision on priorities and approach to future reform to streamline and modernise regulatory collections from banks, including on the best approach to standardise and simplify the link to the data held in firms’ financial and risk systems.

2.14 Given the relative complexity and scale of banking regulatory reporting landscape and how data are collected, this work will require upfront investment funded through the PRA levy in order to ensure that the PRA can realise benefits. The PRA’s costs for 2025/26 associated with FBD are £3.2 million, which will be payable by banks, building societies (fee block A1) and firms dealing as principle (fee block A10), and will be charged as a cost allocation to this group of firms only. The allocation of these costs to firms will be in proportion to the fee paid by a firm to cover the costs of the PRA’s ORA, which are the costs the PRA incurs in performing its functions as a regulator. Calculations will be based on the ORA for the 2025/26 fee year and firms that only pay the minimum fee will pay zero.

Internal model application fees and the model maintenance fee

2.15 The model application fees and model maintenance fees were reviewed as part of last year’s fees consultation. For the 2025/26 fee year, the PRA is proposing to increase these fees in line with CPI inflation in the year to December 2024 and rounded to the nearest £2,500.

2.16 The vast majority of firms holding internal model permissions and firms applying for model permissions come from entities paying fees in the highest application bands, so the PRA does not consider increasing these charges to be a barrier to entry.

Special project fees for restructuring (SPF)

2.17 The SPF hourly rates represent the approximate cost to the PRA of the resources and time spent on the SPF, and so are a combination of the cost of the resource used and the share of the overhead or corporate service costs incurred (such as technology and premises).

2.18 For the 2025/26 fee year, the PRA proposes to increase the rates in line with CPI inflation in the year to December 2024.

Minimum fee

2.19 Currently all PRA-regulated firms pay a ‘minimum fee’ which varies according to the size and type of firm. For the smallest PRA-regulated firms, the minimum fee is the only Periodic Fee they pay. The minimum fees have remained unchanged since 2021/22.

2.20 For the 2025/26 fee year, the PRA proposes to lower the minimum fees for small non-directive friendly societies, and small and medium sized credit unions to £0, because the costs of collection are likely to represent a material proportion of the fee collected.

New firm authorisation application fees

2.21 The PRA last reviewed the fees for new firm authorisation applications in 2021/22. For 2025/26 the PRA proposes to increase the fee charged to Type 3 applications from prospective deposit takers (except credit unions) and insurance firms (except friendly societies), in line with the fee charged by the FCA. This is to reflect that the amount of resource consumed in processing Type 3 applications is broadly comparable between the two regulators. The level of the fee remains significantly below the recovery costs to the PRA in processing these applications, and low compared with other costs associated with setting up a new PRA regulated firm.

Firms applying to cancel before the start of the fee year

2.22 The PRA is proposing to amend Fees 3.13 so that a firm whose cancellation application is not completed within 3 months of the start of the fee year (31 May) becomes eligible to pay PRA fees. This change will align the PRA’s process with that of the FCA’s.

3: Surplus for 2024/25 AFR

3.1 In the PRA’s 2024/25 fee year, there was a surplus of £4.0 million. This is a draft, unaudited figure and therefore will be subject to change, with the final figure to be confirmed when the final policy is published.

Surplus on AFR

3.2 This surplus is allocated to firms in two stages:

• Stage 1 – allocation to fee blocks. The PRA proposes to allocate the AFR surplus across all fee blocks, with the exception of the A0 minimum fee block, in proportion to the AFR for the 2024/25 fee year; and
• Stage 2 – allocation to individual firms. Within each fee block, the AFR surplus is allocated with reference to the fee block population and tariff data for the 2024/25 fee year, excluding firms that are no longer PRA fee payers.

3.3 Table 3.A includes the proposed allocation of the AFR surplus for 2024/25, presented by firm type.

4: Financial penalty scheme and application of retained penalties for 2024/25

4.1 The legislative framework for financial penalties is set out in FSMA. Under FSMA, the PRA must:

• pay any fines and other financial penalties received as a result of regulatory enforcement activity to HM Treasury (HMT) after deducting certain enforcement costs (these costs are referred to as ‘retained penalties’);
• publish and operate a financial penalty scheme to ensure that retained penalties are applied for the benefit of PRA-authorised firms; and
• ensure that any firm that has had a penalty imposed does not share in the distribution of retained penalties for the relevant fee year.

4.2 The PRA’s financial penalty scheme provides for retained penalties to be refunded as a rebate to the periodic fees payable by firms in the six fee blocks. There is no allocation to the A0 minimum fee block, as it does not bear any share of enforcement costs.

Application of retained penalties for 2024/25

4.3 In 2024/25, enforcement activity by the PRA resulted in fines and penalties of £33.9 million, of which £2.1 million is included into the calculation of the £4.0 million retained surplus from 2024/25. The remainder is remitted to HMT.

5: PRA objectives analysis

5.1 The PRA considers the proposals to be compatible with the PRA’s statutory objectives under FSMA:

• to promote the safety and soundness of PRA-authorised firms;
• in the context of insurance, to contribute to policyholder protection;
• as a secondary objective, to facilitate effective competition in the markets for services provided by PRA-authorised persons in carrying out regulated activities; and
• also as a secondary objective, to facilitate the international competitiveness of the UK and its medium to long term growth.

5.2 The PRA considers that the proposed PRA Fees Amendment (No 1) Instrument 2025 will enable the PRA to fund the regulatory activities required to advance its statutory objectives during 2025/26.

5.3 The proposed fees levels are expected to advance the PRA’s secondary competition objective because fees for ORA are allocated in a proportionate manner across all PRA-authorised firms, while fees for specific projects and transactions are targeted only to those predominantly larger firms which generate these specific regulatory activities or, in the case of fees for new authorisation applications, continue to be subsidised by incumbent firms. For these reasons, the PRA considers the proposals to be compatible with the requirement for the PRA to act in a way that advances this objective. Through the use of model application and maintenance/change fees, the PRA also seeks to ensure a balance, with its fees being appropriately targeted while not representing a barrier to the adoption and use of models by smaller firms.

5.4 The PRA expects the proposals to advance the secondary objective of competitiveness and growth. Given the international nature of some financial services, a transparent and proportionate fee regime helps to support the stability and competitiveness of the UK’s financial markets. The PRA also considers the importance of the financial services sector contributing to sustainable economic growth. By ensuring the proposals consider the size and nature of firms, the PRA fees will not act as a barrier to the growth of the financial services sector.

‘Have regards’ analysis

5.5 In developing these proposals, the PRA has had regard to the FSMA regulatory principles and the aspects of the Government’s economic policy set out in the HMT recommendation letter from November 2024. The following factors, to which the PRA is required to have regard, were significant to the PRA’s analysis of the proposals:

• The principle that a burden or restriction which is imposed on a person should be proportionate to the benefits which are expected to result from the imposition of that burden (FSMA regulatory principles): By allocating fees in a proportionate way through the use of fee blocks that take into account the size and nature of the PRA-authorised community, the PRA has had regard to this principle.
• The desirability of sustainable growth in the economy of the UK in the medium or long term (FSMA regulatory principles): The PRA has had regard to this principle by considering the interests of minimum fee payers and firms not affected by certain PRA activities.
• The principle that the PRA should exercise its functions transparently (FSMA regulatory principles and Legislative and Regulatory Reform Act of 2006): The PRA has had regard to this principle by clearly setting out the basis on which the proposed fees are calculated and providing advance notice of the proposed changes to its fees and charges.
• Recognition of different business models (FSMA regulatory principles) and innovation (HMT recommendation letters): The proposals contained within this CP consider the differences in the business models employed by firms and support innovation by ensuring that they do not result in barriers to new entrants.

5.6 The PRA has had regard to other factors as required. Where analysis has not been provided against a ‘have regard’ for this set of proposals, it is because the PRA considers that ‘have regard’ to not be a significant factor for this set of proposals.

Cost benefit analysis

5.7 The PRA is exempt from having to carry out a cost benefit analysis on its draft fee rates.

Impact on mutuals

5.8 Within each fee block, the proposed costs to be recovered from individual firms are based on the size of their business. The PRA proposes to continue to discount the periodic fees payable by non-Directive general insurance firms, many of which are mutuals, by 11%. In addition, all life insurance non-Directive firms are excluded from periodic fees. The PRA does not consider the impact of the proposed fee rates on mutual societies to be significant. For the 2025/26 fee year, the PRA proposes to lower the minimum fee for small non-directive friendly societies, and small and medium sized credit unions to £0. More broadly, the fees on mutual societies continue to be lower than the minimum fee that applies to all other firms, and considerably lower than the cost to the PRA of supervising these firms.

Equality and diversity

5.9 The PRA considers that the proposals do not give rise to equality and diversity implications.