5.1 Chapter 5 in DP1/21 discussed possible measures to lower barriers to growth faced by non-systemic firms that would not be operating under the simpler regime. It highlighted actions that might be taken as the PRA built out the strong and simple framework to cover a wider set of non-systemic firms and the trade-offs involved.

Number of layers

5.2 DP1/21 outlined considerations the PRA would need to make when choosing the number of layers in the strong and simple framework. It asked:

Q27: Would it be preferable to have few or many layers in a strong and simple framework for non-systemic banks and building societies?

5.3 The responses are summarised in Chart 12. A majority of respondents that offered a view supported fewer layers (eg no more than two or three). Some respondents preferred more layers and some suggested there should be a layer specifically for the very smallest firms (ie underneath a simpler regime).

5.4 Some respondents emphasised the importance of designing the framework to enable a smooth progression through the layers by growing firms. Other suggestions included that firms should be able to mix and match prudential rules from different layers, and that the thresholds that define the layers should adjust to the size of the banking sector (see chapter 4 of this statement).