The Prudential Regulation Authority wants 128 of its fixed-size thresholds to rise automatically with UK nominal GDP, in place of the case-by-case updates it uses today. The proposal, published on 7 October 2026 as consultation paper CP13/26, sets the first adjustment for 1 July 2031.
What the PRA is proposing
A threshold, in PRA terms, is a fixed number written into a rule that decides which requirements apply to a firm and how. According to the Bank of England’s news release, the 128 thresholds proposed for indexation sit across banking, insurance and credit unions. They cover which rules apply to firms, how they apply, and what firms must report to the PRA.
The range is wide. The largest threshold in scope is the £320 billion total assets line for detailed capital reporting. The smallest is £7,500, the amount owed to a credit union by an individual. The release also names the size of an insurer subject to Solvency UK and the total assets threshold in the Small Domestic Deposit Takers regime among the significant ones.
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The consultation paper describes the mechanics. One formula applies to every in-scope threshold. It uses UK nominal GDP as published by the Office for National Statistics, with a fixed base year of 2026. Updates run on a recurring five-year cycle after an initial one-off three-year period, and the PRA would announce new values with a six-month window before they take effect. The PRA found that rounding to two significant figures gave sensible results across the range. The paper’s own illustration assumes 12.2% growth, which would take a £50 billion threshold to £56 billion.
What is in scope and what is not
The PRA sorted the 128 thresholds into five buckets. Reporting is the largest, with 52 thresholds, or 41% of the total. Another 31 (24%) define the regulatory perimeter of a regime, 25 (20%) sit in methodologies and approaches, 12 (9%) govern lending, funding and investment flexibility, and 8 (6%) concern internal governance, policies and procedures.
Some thresholds stay out. The PRA excludes those set in legislation or by another authority, those expressed as a percentage or a count instead of a nominal amount, and those where an automatic change could alter prudential outcomes and so needs a policy judgement. The Financial Policy Committee’s O-SII buffer thresholds remain under that committee’s own reviews. The leverage ratio retail deposits threshold, which PS22/25 raised from £50 billion to £75 billion, is also outside the framework.
The Bank of England already runs a similar scheme for the total assets thresholds in its MREL statement of policy, introduced in July 2025 with a three-year update cycle and a first update due in the first half of 2028. The paper says the Bank expects, subject to feedback, to align the frequency of MREL threshold updates with the PRA’s cycle.
A separate discussion paper in section 4 of CP13/26 covers thresholds where the PRA says the costs and benefits of indexation are less clear. These include certain credit risk thresholds that affect internal ratings based models, and thresholds shared with the Financial Conduct Authority. They are not part of the proposal, though they could be brought in later.
Why the PRA says it needs this
The paper names the problem “prudential drag.” A fixed nominal threshold stays put while prices and the economy grow, so more firms cross it, or existing requirements become tighter than the PRA originally intended. The paper adds that static thresholds can create cliff-edge effects for firms approaching them, and that these are likely to weigh more on smaller and growing firms, for which the extra cost of crossing a line is a larger share of operating costs.
The PRA also cites industry feedback. Firms told it that uncertainty about when they would be subject to requirements makes planning harder and can restrain lending and balance-sheet growth. Katharine Braddick, Deputy Governor for Prudential Regulation at the Bank of England and CEO of the PRA, said in the release: “This modernisation will significantly help financial services firms plan for the future, offering crucial stability and predictability, while also preventing out of date thresholds becoming restrictive barriers to growth.”
The PRA chose nominal GDP because it captures both changes in prices and real economic growth, which the Consumer Price Index or real GDP growth would not. It chose five years to balance the recurring adjustment cost to firms against how closely thresholds follow the economy.
What the proposal does not do
Three limits are stated in the paper. First, indexation would not be backdated. A threshold set years ago is not lifted to a 2026 equivalent, and the PRA says it can still recalibrate any single threshold through its usual policymaking. Second, firms that grow faster than the wider economy would still move across indexed thresholds and take on the associated requirements. Third, indexation does not always loosen a rule. The PRA says fewer than 10% of the in-scope thresholds work the other way, and gives certain thresholds in the UK Solvency II Standard Formula as an example, where a higher value could in some cases raise the resulting Solvency Capital Requirement.
What it means for the finance leader
This section is our reading, not the PRA’s. The first adjustment is nearly five years away, so no threshold moves because of this proposal in the near term. What changes first is how a firm plans. A bank or insurer sitting just under a line can now model when that line moves, instead of waiting for a policy statement. A finance team can put the 2031 date and the six-month implementation window into its reporting and systems roadmap.
The consultation matters sooner. It closes on 7 February 2027, and the list of 128 in Appendix 3 and Appendix 4 is open to comment, including the question of which thresholds belong on it. The PRA says it wants evidence on costs and benefits for the discussion-paper thresholds specifically.
Three steps follow. Pull the list and mark every threshold your firm sits within reach of. Check whether each one is rewarded or penalised by a higher value, since fewer than 10% cut the other way. Decide before February whether a response is worth filing, particularly if one of your thresholds sits in the discussion paper.
Regulators elsewhere are also revising how their rules age. In the US, the Fed extended the comment period on its Regulation O modernisation proposal to November 4, and the Fed and FDIC recently found no shortcomings in 15 living wills.
Source: Bank of England
