9.1 The PRA expects firms to have in place effective internal policies, processes, systems and controls to consider whether the currency mismatch multiplier should be applied to retail and residential real estate exposures in accordance with Article 123B of the Credit Risk: Standardised Approach (CRR) Part (including as part of their due diligence processes where applicable).

9.2 The PRA does not consider that it is necessary for firms to request new information from obligors on an ongoing basis to monitor whether a currency mismatch multiplier needs to be applied; however, the PRA expects firms to reassess if there is a currency mismatch for an exposure in each of the following circumstances:

(a) the obligor has provided new information that suggests the currency of their source of income has changed;

(b) the firm has received information that the value of any natural hedges has changed. This includes changes to the value of any assets being counted as a natural hedge; and

(c) the value of any instalment for the exposure has changed.

9.3 For the purpose of determining the currency of the obligor's source of income, the PRA considers that it is generally sufficient for firms to assess whether the obligor's main source of income differs in currency from that of the loan. However, the PRA clarifies its expectations of firms in the following circumstances: