Weighing Up The PRA's Early Account Scheme: Insights From The First Case Concluded Using The Process

In March 2026, the UK Prudential Regulation Authority (PRA) fined U K Insurance Limited (UKI) £10.6 million for failures relating to an overstatement of its Solvency Capital Requirement Coverage Ratio between 2023 and 2024. 

This is the first outcome using the PRA's Early Account Scheme (EAS), which was introduced in January 2024 as part of the PRA's revised enforcement approach (see our earlier articles here and here); it offers useful insight into how the scheme will operate in practice and how firms should approach the decision whether to participate. 

Background: A significant but non-deliberate reporting failure

UKI made a miscalculation of its Solvency II balance sheet which resulted in it overstating its solvency to the PRA and to the market to an overall figure of £99.9 million by the end of Q1 2024.

UKI identified the issue on 6 August 2024 and notified the PRA two days later. What followed was a prompt and structured response:

• on 13 August, UKI provided a paper to the PRA confirming the error and setting out a preliminary root cause analysis;
• on 21 August, it engaged an external accountant to undertake an expedited review; and 
• on 2 September, the same day the report was produced, UKI shared it with the PRA, together with a management response outlining both immediate remedial steps and longer-term improvements. 

The PRA concluded that the failures reflected weaknesses in internal controls, governance and resourcing within UKI's finance and actuarial functions, rather than deliberate misconduct. Nonetheless, the error persisted across multiple reporting cycles and affected both regulatory submissions and public disclosures, despite several opportunities for earlier detection. 

The EAS in action

This case is notable as the first enforcement outcome in which a firm has made early admissions through EAS and been given an additional settlement discount. 

The EAS provides that firms may qualify for an enhanced settlement discount of up to 50%, compared with the usual maximum of 30%. Paragraph 10.40 of the PRA's enforcement policy sets out the factors relevant to the application of the enhanced discount, including: 

• the provision of comprehensive, accurate and timely information, including a detailed factual account of the matter under investigation (the Account); 
• material assistance to the PRA in progressing its investigation efficiently and effectively; 
• early and fulsome admissions of both facts and regulatory breaches; and
• prompt cessation of the relevant conduct, together with evidence that it was not repeated or allowed to continue. 

In UKI's case, the PRA considered that these criteria were met. UKI's participation in the EAS therefore attracted the maximum 50% discount, reducing the penalty from £21.25 million to £10.625 million. 

Why the PRA endorsed EAS participation

The PRA's reasoning provides a clear indication of the type of conduct that will justify an enhanced discount under the EAS. In particular:

• Early and candid engagement: UKI engaged proactively and candidly with the PRA, providing a comprehensive, timely, and fulsome Account;
• Material assistance: that Account enabled the PRA to develop a rapid understanding of the nature, seriousness and impact of the breach;
• Early admissions: UKI made admissions as to both the relevant facts and the regulatory breaches shortly after producing its Account, and well in advance of any settlement proposal by the PRA;
• Cessation and remediation: UKI demonstrated that the conduct had ceased, had not been repeated, and that appropriated remedial steps had been implemented properly. 

The PRA emphasised that this level of cooperation supports more efficient enforcement outcomes, signalling a clear policy intent to reward early candour.

Implications for firms 

The UKI case provides the first concrete guidance on how firms should weigh up participation in the EAS.

A premium on speed and structure of response

UKI's ability to secure the maximum discount was closely linked to the pace and organisation of its response in the days immediately following identification of the issue. The rapid commissioning of an external review, coupled with early delivery of a structured root cause analysis and management response, suggests that the PRA will place significant weight not just on cooperation, but on how quickly and coherently a firm can mobilise. Firms may therefore need to ensure that escalation, investigation and reporting frameworks can operate on a compressed timetable. The PRA had been somewhat reticent to set out how the full discount could be achieved. UKI's efforts in producing a fulsome Account so promptly sets a standard other firms may seek to meet, albeit it may not be so straightforward in all cases. 

Will it lead to quicker outcomes? 

Despite the fact that the PRA set out the timing of these initial steps, the date its investigation opened, and therefore the date on which the Account had to be produced (within six months unless in exceptional circumstances), is not apparent from the notice. The EAS is intended to lead to faster outcomes driven by the deadline for producing an Account. Notwithstanding the early engagement in this case, there was still over 19 months between the identification of the breach and publication of the final notice. It therefore remains to be seen whether the EAS will necessarily lead to speedier resolution of cases for firms who are keen to put matters behind them by early admissions. Indeed, the 19 months period is comparable to recent FCA investigations under the FCA mantra of 'pace and focus'. The FCA has not sought to copy the EAS, rather, it has taken steps to streamline its caseload and leverage more intensive supervisory intervention prior to a case being referred to Enforcement.

The 'Account' as a substantive exercise, not a formality

The PRA’s emphasis on the quality of UKI’s Account indicates that this is not a tick-box requirement. In practice, it resembles a near-complete reconstruction of the issue at an early stage, including root cause, impact and remediation. For firms, this raises the bar for what internal investigations must deliver before any settlement discussions have begun. (The Notice does not reveal what steps were taken in relation to governance of the firm's review or the attestation that is needed. These are key matters for firms to consider in seeking to use the EAS.)

Early admissions as a strategic inflection point 

As the PRA indicated when the EAS was introduced, participation achieving the discount is contingent not simply about information-sharing, but about taking a position on liability at an early stage. Firms will need to consider carefully the benefits of doing so against the potential constraints this may create in parallel or subsequent proceedings especially if they also waive privilege.

Remediation must be demonstrable and embedded

The PRA’s assessment focused not only on whether UKI had identified and remediated the specific error, but also on whether it had addressed the underlying control, governance and resourcing weaknesses. Firms seeking to rely on the EAS will therefore need to evidence both immediate fixes and broader, sustainable remediation. Firms will also need to consider the extent to which admissions on breaches in relation to one specific area may be insufficient for the PRA to satisfy itself that broader issues with systems and controls have been acknowledged.

Conclusion: A new enforcement dynamic?

The first firm to benefit from the enhanced discount from the EAS signals a clear evolution in the PRA's enforcement approach and sends a clear message to firms: early, proactive, and candid engagement can materially mitigate financial and reputational exposure. However, participation in the EAS is not without risk, and requires careful consideration of legal, strategic and commercial considerations at a stage when the picture may still be developing. 

As further cases emerge, the application of the scheme will become clearer. For now, UKI is the benchmark – illustrating both the potential benefits of cooperation, and the high bar firms must meet to secure the maximum additional settlement discount.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.