The PTSG is a forum for discussing:
- Pillar 2 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 2 text in the Handbook;
- the practical implementation and monitoring of compliance with Pillar 2 requirements; and
- any other Pillar 2 issues particular to UK domestic policy.
The P2SG will be the means by which the FSA will:
- discuss its approach to, and process for, developing rules and guidance to implement Pillar 2;
- collaborate with firms to develop the FSA's Pillar 2 policy in Handbook text; and
- collaborate with firms to address issues of policy implementation, and the monitoring of compliance with Pillar 2 policy in the Handbook.
Scope
The P2SG may discuss, as appropriate, such issues or topics necessary to ensure effective implementation of Pillar 2. Example of topics that could be discussed at the P2SG are as follows:
- Pillar 2 guidance for firms;
- Pillar 2 planning for firms;
- Pillar 2 risk appetite;
- Interaction between Pillar 2 and the interim capital framework;
- Developments in the FSA’ stress testing regime;
- Pillar 2 changes resulting from new trading book rules in 2011;
- Pillar 2 methodologies;
- Pillar 2 industry training;
- Pillar 2 economic capital modelling/alternate internal capital approaches;
- Pillar 2 relationship with the model approvals process;
- Pillar 2 Consultation Paper and text for the PSB;
- Pillar 2 building block approach; and
- Pillar 2 CEBS Consultation Papers.
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 P2SG members its Pillar 2 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 2 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 P2SG minutes;
- supply P2SG members with the agreed meeting agenda; and
- provide such papers, as necessary, for the purposes of explaining Pillar 2 policy and implementation issues that the FSA is seeking to resolve and the proposed solutions to them.
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 2 implementation in the Handbook;
- reviewing the Handbook and providing suggestions for improvements to the text with respect to Pillar 2; and
- assisting the FSA in assessing the overall cost and benefits for UK firms of implementing proposals for Pillar 2.
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 2 information, papers, proposals etc, that are being discussed by the P2SG, to ensure the development of a consistent FSA Pillar 2 approach.
Meeting frequency
P2SG meetings will be held approximately every eight weeks. Ad hoc meetings may be held where necessary.
Circulation of P2SG papers
P2SG 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.
