Purpose of Group

The PTSG is a forum for discussing:

  • Pillar Two policy and implementation issues arising from the revised Basel Accord ('Basel'), the Capital Requirements Directive ('CRD') and the Committee of European Banking Supervisors ('CEBS')/Level 3;
  • The FSA proposed Pillar Two text in the Handbook;
  • The practical implementation and monitoring of compliance with Pillar Two requirements; and
  • Any other Pillar Two issues particular to UK domestic policy.

 

The PTSG will be the means by which the FSA will:

  • Discuss its approach to, and process for, developing rules and guidance to implement Pillar Two;
  • Collaborate with firms to develop the FSA's Pillar Two policy in the Handbook Text;
  • Collaborate with firms to address issues of policy implementation, and the monitoring of compliance with Pillar Two policy in the Handbook, and;
  • Identify the substantive Pillar Two issues that need to be raised with the Basel Advisory Group.

 

Scope

The PTSG may from time to time discuss, as appropriate, such issues or topics necessary to ensure effective implementation of Pillar Two.  Example of topics that could be discussed at the PTSG are as follows:

  • Pillar Two Pilot ICAAP Reviews;
  • Pillar Two Cost Benefit Analysis;
  • Pillar Two Data Needs;
  • Pillar Two Guidance for Firms;
  • Pillar Two Planning for Firms;
  • Pillar Two Industry Training;
  • Pillar Two Economic Capital Modelling/alternate Internal Capital Approaches;
  • Pillar Two relationship with the Model Approvals Process;
  • Pillar Two Template for Firms;
  • Pillar Two Consultation Paper and Text for the PSB;
  • Pillar Two Building Block Approach;
  • Pillar Two CEBS Consultation Papers;
  • Pillar Two Risk Buckets.

 

Responsibilities

The FSA will:

  • Ensure that issues raised by firms are given proper consideration, are discussed at the appropriate level within the FSA, and that appropriate action is taken to address them;
  • Share with the PTSG members its Pillar Two policy and implementation proposals and rationale;
  • Ensure that firms' views on policy options are factored into the FSA's current negotiation in respect of Pillar Two in the EU (most notably CEBS/Level 3);
  • Circulate minutes from the meeting, comprising action items for the FSA and PTSG members;
  • Propose a draft agenda for the next meeting;
  • Publish on its website the final version of the PTSG minutes;
  • Supply PTSG members with the agreed meeting agenda;
  • Provide such papers as are necessary for the purposes of explaining Pillar Two policy and implementation issues that the FSA is seeking to resolve and the proposed solutions to them.

 

The PTSG members are responsible for:

The PTSG members are responsible for:

  • Providing views on the appropriateness and practicality of the FSA's proposed solutions to policy and implementation issues;
  • Where proposals are considered inappropriate or impractical, offering alternative solutions to policy issues in respect of Pillar Two implementation in the Handbook;
  • Reviewing the Handbook and providing suggestions for improvements to the text with respect to Pillar Two;
  • Assisting the FSA in assessing the overall cost and benefits for UK firms of implementing proposals for Pillar Two.

 

Interaction with other FSA groups

Where an issue arises that requires senior level involvement from firms or the FSA, it will be referred up from the PTSG to the Basel Advisory Group if a policy matter.

The PTSG may from time to time share with other existing FSA Standing Groups, such Pillar Two information, papers, proposals etc, that are being discussed by the PTSG, to ensure the development of a consistent FSA Pillar Two approach.

 

Meeting frequency

PTSG meetings will be held every six weeks.  Ad hoc meetings may be held where necessary.

 

Circulation of PTSG papers

PTSG members are free to circulate papers within their organisations and, in the case of trade associations, around trade association members in order to gauge industry views.

 

Disclaimer

The papers and meetings of the group are intended to enhance continued discussion of the topics rather than to present a comprehensive account of the issues or a set of agreed conclusions.  The minutes of the meetings report the discussions of the group, but neither the papers or minutes nor any reported remarks by anyone present at one of those meetings should be read as representing either the formal positions of the member institution or of the FSA.  The FSA's policy proposals will be subject to consultation in the normal way.