Judgement-led approach to conduct risk capital draws criticism
The UK prudential banking regulator is considering using predominantly its judgement to determine the level of additional Pillar 2A capital banks must hold to cover conduct risk. Risk management experts respond to the idea
The UK's Prudential Regulation Authority (PRA) looks set for a scuffle with the country's biggest banks over its proposal to use mostly "supervisory judgement" to determine how much capital they must put aside for conduct risk.
The methodology, outlined in a PRA consultation paper last month, treats conduct risk separately from non-conduct risk and is aimed at calculating additional Pillar 2A
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