Solvency UK reporting updates ease own funds permission rules
The Prudential Regulation Authority has finalized Solvency UK reporting amendments and updated own funds permissions in Policy Statement PS18/26. All policy changes and corresponding taxonomy updates will take effect for reporting reference dates on or after December 31, 2026.
Streamlined taxonomy and own funds relief
The final policy incorporates feedback on consultations CP22/25 and CP4/26 into a single taxonomy update.
Crucially, the Prudential Regulation Authority (PRA) has removed the permission requirement under section 138BA of FSMA for classifying equity-accounted subordinated liabilities into own funds tiers, aligning them with liability-accounted instruments under standard pre-issuance notification.
For third-country branches, projected Financial Services Compensation Scheme (FSCS) reporting has been reduced from three years to one year to balance burden with supervisory oversight.
Additionally, the Matching Adjustment Asset and Liability Information Return (MALIR) transitions from Excel to XBRL, while firms gain an voluntary opt-in to adopt NACE 2.1 codes from December 31, 2026.
Addressing industry implementation concerns
The measures follow the initial Solvency UK reforms implemented in 2024 to rectify operational ambiguities and data quality issues.
Industry feedback on CP22/25 and CP4/26 highlighted concerns over cumulative compliance burdens, tight timelines, and temporary divergence from EU NACE 2.1 implementation schedules.
In response, the PRA dropped a proposed new non-life income template variant, incorporating required lines into existing templates instead.
It also adjusted historical reporting baselines and harmonized validation checks to avoid double counting in own funds reconciliation reserves.
Pragmatic tweaks, lingering friction
Rolling back three-year FSCS projections and dropping duplicate templates demonstrates welcome pragmatism.
Yet forcing firms to navigate asynchronous NACE coding relative to EU rules creates needless compliance friction.
Aligning changes into a single December 2026 taxonomy helps, but real relief depends on smooth IT execution.