2.1 Chapter 2 in DP1/21 described the existing prudential framework for small, non-systemic banks and building societies in the UK. It outlined the reasons why the framework may be overly complex for these firms, and the possible consequences for PRA objectives. It referred to a 'complexity problem' with the existing prudential framework faced by small, non-systemic firms. Chapter 2 also explained that simplifying prudential regulation for smaller firms risked adding to a 'barriers to growth problem'; by having different requirements for smaller and larger firms, a small firm wishing to grow would need to adjust to changes in prudential requirements as it expands.
2.2 The following question was posed in Chapter 2:
Q1: Do you have any comments on our description of the complexity and barriers to growth problems faced by non-systemic banks and building societies?
2.3 A majority of respondents that included an answer to this question agreed with the description of the 'complexity problem'
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