The Prudential Regulation Authority (PRA), the UK body responsible for supervising banks, insurers and credit unions, has put forward plans to tie 128 regulatory thresholds to nominal Gross Domestic Product (GDP), so they rise automatically instead of through occasional manual revisions.

The thresholds in question decide which rules a firm must follow, how those rules are applied, and what information it has to submit to the regulator. Under the current system, these figures are revised on an ad hoc basis.

The PRA argues that indexing them would make the framework more proportionate, lower compliance costs for many firms, and give businesses greater certainty when planning ahead, which in turn would remove obstacles to growth.

The proposed package covers a wide range of values. At the top end sits the £320bn total assets threshold that triggers detailed capital reporting. At the bottom is a £7,500 limit on what an individual can owe a credit union. Other notable thresholds within scope include the size at which an insurer falls under Solvency UK and the total assets threshold for the Small Domestic Deposit Takers regime.

If adopted, the first adjustment would come into effect on 1 July 2031, with subsequent revisions every five years. The regulator said the five-year cycle aims to strike a balance between limiting the repeated costs firms face when thresholds change and keeping those figures in step with the wider economy.

The PRA selected nominal UK GDP, as published by the Office for National Statistics, as its benchmark because it reflects both inflation and real economic expansion.

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