What type of firms does the Prudential Regulation Authority (PRA) primarily regulate?

The Prudential Regulation Authority (PRA) primarily regulates systemically important firms because its role focuses on ensuring the stability and integrity of the financial system. Systemically important firms are those whose failure could have a significant impact on the economy and the financial system as a whole. This includes major banks, insurers, and investment firms that play a crucial role in the UK's financial landscape.

By concentrating on these firms, the PRA aims to mitigate risks that could lead to broader economic instability. This regulatory approach helps maintain public confidence in the financial system and ensures that firms can meet their obligations, contributing to the overall resilience of the financial sector.

In contrast, while the PRA does have oversight over all insurance companies, its primary focus is on larger, systemic firms, as their operations and potential failures could have far-reaching consequences. Small businesses and independent advisors are typically not under the direct supervision of the PRA, as they usually pose less risk to the financial system on a systemic level.