Basel 3.1 and Small Domestic Deposit Takers Pillar 2A Off Cycle Review

 

Basel 3.1

Firms that are to be subject to Basel 3.1 and wish to claim Pillar 2A Lending Adjustments (related to non-defaulted exposures to SMEs and / or to infrastructure projects), are required to submit risk weighted exposure data as at close of business 31 December 2025. Submission is required by 31 March 2026.

A high level summary of the total risk weighted exposure and a detailed breakdown, must be provided to the regulator for it to determine the appropriate adjustment to Pillar 2A capital.

Further details are available in https://www.bankofengland.co.uk/prudential-regulation/key-initiatives/capital-requirements-directive-iv/basel-3-1-data-collection-exercise

Submission of the information is to be by e-mail – B3.1P2DataRequest@bankofengland.co.uk

 

Small Domestic Deposit Takers (SDDT)

The equivalent Off Cycle Review for SDDT firms has the same dates as for Basel 3.1 (above). Data are to be submitted by e-mail to SDDTP2DataRequest@bankofengland.co.uk. The information required by the regulator is similar to that for Basel 3.1 firms.

 

The templates for the Off Cycle Reviews (Basel 3.1 and SDDT) are now available in the Whistlebrook regulatory reporting software. There are separate versions for SDDT and Basel 3.1.

 

Regulatory Reporting Changes

 

Financial Resilience and General Insurance

In the Financial Conduct Authority’s (FCA’s) consultation paper 25-35, it is proposed that Financial Resilience form FIN073 frequency be reduced from quarterly to annually (for most firms that also submit section A of the Retail Mediation Activities Return (RMA-A). REP021d (General Insurance Pricing Information Closed Books of Business) will be withdrawn.

 

Complaints

A new single FCA reporting template will be introduced and replace Complaints DISP 1 Ann 1R; Consumer Credit Complaints; and PS Complaints. The first reporting period is not until 1 January 2027 to 30 June 2027.  Periods will be fixed at six months. Data are to be required at each individual legal entity level.

 

Deletions

In the PRA’s consultation paper 21-25, it was proposed that 34 FINREP templates be deleted; two COREP forms (C 05.01 and C 05.02) and PRA 109 be removed. Policy statement 27-25 has confirmed that these templates will be withdrawn on 31 December 2025. Firms will not be required to make any data submissions on the forms being deleted, where this date would normally be a report reference one.

Appendix 2 of consultation paper 21-25 has the list of templates being removed. The appropriate changes will be made in the Whistlebrook regulatory software.

 

Bank of England Statistical Taxonomy 1.3.1

The Bank has issued this taxonomy that is to be used for Statistical reporting. The data requirements are not changing between taxonomy 1.3.0 and the new one. There are only technical enhancements being made by the regulator. The taxonomy will be included in the Whistlebrook regulatory software.

 

Building Societies’ Treasury and Lending Activities

PRA policy statement 26-25 has removed four approaches to financial risk management and Treasury activities i.e. ‘Administered’, ‘Matched’, ‘Extended’ and ‘Comprehensive’. Related limits applicable to Treasury and lending have also been withdrawn. The changes are effective from 5 December 2025. Essentially, the policy statement has removed the contents of Supervisory Statement 20-15.

 

Loan to Income (LTI) Flow Limit

The Financial Policy Committee recommended in Q2 of 2025 that individual firms be able to increase their share of high LTI lending. At an aggregate level, the 15% limit on the number of mortgages that can have an LTI of 4.5 or more would not be exceeded. The Prudential Regulation Authority and the FCA will publish a consultation paper in Q1 2026, covering this topic.

 

Climate Change

The PRA has replaced its Supervisory Statement 3-19 with a new one identified as SS 5-25. The latest Supervisory Statement specifies the PRA’s expectations on how firms should enhance the ways in which they respond to the risks presented by climate change. Of note:

 

• Each regulated firm should carry out an internal review of its current ability to meet the regulator’s expectations. The review is to be completed by 3 June 2026.
• The review has to include identification of any gaps in a firm’s ability to satisfy the expected goals. Where there are gaps, a plan of action will be required on how to close them.
• Regular identification and assessment of the risks posed to the business, by climate change, is expected. Where materiality is shown, proportionate scenario analysis should be undertaken as a means of measuring the potential impacts on the business, including capital, asset values, liquidity, profitability and ability to deliver key services.
• ICAAP and ILAAP should include climate change risks.
• Disclosures ought to explain a firm’s approach to management of risks linked to climate change.
• Expected credit loss estimates should include the effects of climate risk.
• UK branches of foreign institutions are excluded from the expectations of this Supervisory Statement.

 

Minimum Requirements for Own Funds and Eligible Liabilities (MREL)

The assets threshold that influences the resolution strategy applicable to a firm, is to be increased on 1 January 2026. Prior to the increase, the range was set as ‘greater than £15bn and up to £25bn’. This range will be adjusted to be ‘greater than £20bn and up to £30bn’.

The level of MREL for ‘partial transfer’ resolution firms (i.e. those that the Bank of England judges should be subject to that method were they to fail), will be reduced to the higher of Pillar 1 plus Pillar 2A capital or the amount of Tier one that satisfies the leverage ratio requirement. This change is effective from 1 January 2026.

 

Resolution Assessment Framework

The level of retail deposits that triggers when a firm is subject to the Resolution Assessment Framework is to be raised from £50bn to £100bn. This proposal is in the PRA’s consultation paper 14-25. If the change goes ahead, it will be implemented during the first half of 2026.

 

SDDTs and Recovery Plans

Also in this PRA consultation paper 14-25, is a proposal that SDDT firms will have the need to review their recovery plans reduced from annual to every two years.

 

Large Exposures (LE) Framework

PRA policy statement 14-25 has removed (effective 1 January 2026) two options available when comparing exposures to LE limits. These are:

• Exclusion of exposures to the UK Deposit Guarantee Scheme and
• Deduction of either 50% of the market, or 60% of the mortgage lending, value of immovable property used as credit risk mitigation.

 

External Credit Rating to Credit Quality Step Mapping

PRA policy statement 12-25 will introduce two new mapping tables. These tables will replace existing ones that were onboarded from the EU at 31 December 2020. Both mapping tables will be effective from 1 January 2026.

 

WIRES Releases

 

ID	Content	Estimate Date
7.2	Taxonomies and related changes for Basel 3.1 and the Small Domestic Deposit Takers Regime	30 June 2026

 

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This regulatory update is Whistlebrook’s understanding of the position as at 23rd December 2025.