Matching adjustment: PRA note clarifies and criticises equally

UK regulator sets out cashflow needs, but restates old concerns

Bank of England

In its second letter to the industry inside a month on the matching adjustment, the UK's Prudential Regulation Authority (PRA) carried on the theme from its previous note, on equity release assets – encouraging and admonishing in roughly equal measure.

"The letter is strongly-worded, a bit like a note from the headmaster," says one UK banker. "But it does set the boundaries within which firms can operate."

The most recent letter, which was published on March 9, sets out to explain to insurers ho

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