Recommendation 118

Some witnesses suggested that the experience and capacity of supervisors leads to slow and inefficient approval processes, which may impact on their ability to scale and grow. Witnesses noted that the limited resources allocated to smaller firms have introduced delays to critical supervisory activities. Allica Bank told us that: “many scale-up firms have seen significant delays to the capital review process” 186 and that “this is primarily a function of there being insufficient people in the relevant specialist teams at the PRA to work on these matters.” 187 As part of the capital review process the PRA may apply additional firm-specific capital holding requirements dependent on a firm’s risk profile. 188 Allica Bank noted that delays in the capital review process have contributed to significant uncertainty regarding the bank’s future capital requirements and that: “This degree of capital uncertainty reduces the investor confidence that is required in continuing to supply capital to underpin … SME lending growth.” 189