Transcript Reforming european and uk financial regulation

Reforming european and uk financial regulation
19 March 2012
Alastair Evans, Head Government Policy & Affairs, Lloyd’s
Contents
1. Insurance Legislative and Regulatory Environment
2. Reform of UK Financial Regulation
3. Solvency II
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Reforming European and UK Regulation
19 March 2012
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Insurance Legislative and Regulatory
Environment
 Lloyd’s
 Formidable array of debates, challenges and change
internationally, affecting both the substance and architecture of
insurance regulation.
 Individual countries, e.g. US (Dodd-Frank, establishment of
FIO).
 EU: ESRB, EIOPA, Solvency II, revision of Mediation
Directive, insurance guarantee schemes, data protection,
anti-discrimination proposals (gender, age and disability)
 Globally: work of IAIS on systemic risk, regulation of
internationally active insurance groups.
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Reforming European and UK Regulation
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The Lobbying Environment
Global
environment
G 20
EU
IMF
TAXUD
ECON
IMCO
European
Parliament
INTA
WB
JURI
TRADE
IFRIC
TREN
OECD
EMPL
European
Commission
ENTR
ENV
Economic & Social
Committee
AGRI
ENVI
ITRE
ARC
ECJ
European
Central Bank
IASB
MARKT SANCO
COMP
EMPL
WTO
Council/
EU Presidency
Lloyd’s
IAA/EAG
UNEP
EFRAG
CESR
EIOPC
IAIS
Joint
Forum
Insurance
mediation
Financial
stability
EFC
EIOPA
NCOIL
ESRB
Occupational
pensions
FSC
Insurance
groups
Solvency II
FSB
FCC
NAIC
IOPS
= central bodies
= representation of States
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Reform of UK Financial Regulation
 Reforms were principally a response to the banking crisis.
 Government’s first condoc (July 2010): insurance supervision
hardly mentioned.
 Insurance has different features from banking (business model,
performance during crisis).
 New structure applies across the financial sector.
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Reform of UK Financial Regulation (cont’d)
 Main issues identified in our responses:
 FPC should have access to sufficient levels insurance
expertise.
 PRA should include a separate insurance division headed
by individual of same level of seniority as for banking.
 PRA and FCA must be under obligation to publicly consult
on rules.
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Reform of UK Financial Regulation (cont’d)
 The regulatory bodies’ rule making process must be subject to the
full range of statutory safeguards that exist under FSMA.
 There must be proper co-ordination between the new regulatory
authorities.
 There must be proper co-ordination between the authorities in
making input into EU debates.
 Transitional arrangements must be well managed given other
regulatory challenges currently faced by the insurance industry
 PRA should prudentially supervise Lloyd’s market. Supervisory cooperation arrangements between regulator and Lloyd’s should
continue.
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Reforming European and UK Regulation
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Reform of UK Financial Regulation (cont’d)
 These concerns largely taken on board by Government in
recent condocs, in draft Financial Services Bill and proposed
Memorandum of Understanding between the regulators.
 Welcome establishment of shadow PRA and FCA teams within
FSA.
 Will continue to monitor draft Financial Services Bill closely.
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Solvency II
 Complete overhaul of EU system of insurance supervision.
 Objectives
 Three Pillars
 Omnibus II/Level 2 measures.
 Challenging Legislative Timetable
 Some unresolved issues (length of provisional equivalence
period for third countries, currency risk).
 Lloyd’s: £300m expenditure on preparation.
 Supportive of overall regime.
 2014: implementation date for firms.
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Reforming European and UK Regulation
19 March 2012
© Lloyd’s
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Reforming European and UK Regulation
19 March 2012
© Lloyd’s