This chapter discusses possible measures to lower barriers to growth faced by non-systemic firms that would not be operating under the simpler regime. It highlights actions that might be taken as the PRA builds out the strong and simple framework to cover a wider set of non-systemic firms, and the trade-offs involved.

5.1 As explained in Chapter 3, the long-term vision for prudential regulation for non-systemic banks and building societies in the UK is to have a graduated framework in which prudential requirements and expectations increase and/or become more sophisticated as firms grow bigger and/or undertake a wider range of complex activities. This means there would be a series of thresholds that define when requirements and expectations change for a firm in a graduated framework.

5.2 Introducing a graduated prudential framework in order to achieve more simplicity could potentially increase the number of thresholds and hence potentially make the barriers to growth problem worse.

5.3 In Chapter 4, possible ways to help small firms transition out of the simpler regime were discussed. This chapter will expand on this by discussing measures the PRA could take to lower barriers to growth for other non-systemic banks and building societies.