7.1 This paper has set out a number of considerations regarding how the prudential framework for non-systemic firms might be changed to make it simpler while maintaining the resilience of all firms and minimising the risk of creating higher barriers to growth.

7.2 The ideas set out in the paper were they introduced would represent a significant change to the prudential framework for non-systemic firms in the UK. This is why the PRA has decided to write a discussion paper rather than proceeding straightaway to publishing proposals for consultation.

7.3 The argument for simplifying PRA's prudential rules and expectations for smaller firms is that the cost of understanding, interpreting, and operationalising prudential regulation falls more heavily upon smaller firms. Those costs could also have negative effects on the PRA's objectives. The aim is to simplify regulation in ways that reduce those costs while still ensuring all PRA-regulated firms face prudential rules and expectations that maintain their safety and soundness.

7.4 This is why the PRA wants to introduce a strong and simple prudential framework. This framework would support the stability of the banking sector in the UK, but in doing so enable a dynamic and diverse banking sector in which successful firms can grow as other less successful ones contract and exit the sector.