1.1 As set out in Discussion Paper (DP) 1/21, the Prudential Regulation Authority (PRA) is seeking to mitigate the 'complexity problem' that can arise when the same prudential requirements are applied to all firms. The PRA aims to achieve this through its 'strong and simple' initiative that would seek to simplify the prudential framework for non-systemic domestic banks and building societies, while maintaining their resilience [April 2021: FS1/21.], [Note: The PRA would also seek to ensure that the UK continues to meet the Basel Core Principles for Effective Bank Supervision.]. Since this would be a major change in prudential policy applying to banks and building societies in the UK (hereafter 'firms'), taking a number of years to develop and implement, the PRA is starting to achieve its aim by developing a 'simpler regime' for the smallest firms. This approach aims to ensure the benefits of simplification are experienced by the largest number of firms as soon as possible.

1.2 In this Consultation Paper (CP) the PRA sets out its proposals for introducing a definition of a 'Simpler-regime Firm' ['Simpler-regime Firm' is a working term that might be revised in due course. The PRA would welcome views on the proposed name.]. The PRA's implementation of this proposed definition would be the first step in designing a strong and simple framework.

1.3 The proposals in this CP would introduce a new definition, Simpler-regime Firm, in the PRA Rulebook.