Which financial institutions are covered under GENPRU but not BIPRU?

The correct choice relates specifically to the categorization of financial institutions under the Prudential Regulation Authority (PRA) regulations. GENPRU, which stands for General Prudential Standards, encompasses a range of financial institutions to ensure they maintain adequate capital and risk management practices. Insurance companies fall under this umbrella because they are subject to different regulatory requirements compared to banks.

Insurance companies are unique in their operational models and risk profiles, which necessitate distinct framework guidelines that GENPRU provides. These guidelines focus on the overarching prudential standards applicable to insurers, reflecting the inherent differences in how insurance products are structured and managed compared to banking products.

In contrast, BIPRU (Banking Interim Prudential Sourcebook), which was used prior to the introduction of the Capital Requirements Directive (CRD) requirements, specifically targets banking institutions and the unique risks they face, such as those associated with lending and deposit-taking.

The other financial institutions listed, though significant players in the financial system, primarily fall under regulations aligned with BIPRU due to their banking-like activities. Retail banks, investment banks, and payment service providers conform to standards that relate primarily to their roles in managing deposits or providing transactional banking services.

Thus, insurance companies are the financial institutions governed by GENPRU