The review into Britain’s financial rules post-Brexit will not lead to any “radical departure” or a reduction in capital requirements, the Bank of England (BoE) said today.
Brexit has prompted the government to look at insurance capital rules inherited from the EU, with hopes it could lead to fewer requirements.
The bank’s Deputy Governor Sam Woods, who also leads the BoE’s Prudential Regulation Authority, today indicated that would not be the case and there would be a “shift towards more rule-making by the regulator.”
“Now that we have left the EU we have no interest whatsoever in lowering levels of resilience or policyholder protection, but we can and should make changes to tailor regulation so it fits our market better and is more efficient and coherent,” he said in a speech to the Association of British Insurers (ABI).
“That process will take some time but it will work better if the detailed rules are placed into our rulebook.”
The EU directive Solvency II is also being looked at following a review launched by the Treasury last autumn. “By design, the current regime is tailored to the EU sector as a whole but, in several important ways, the UK insurance sector is different,” economic secretary to the Treasury John Glen said at the time.
Woods today said he had doubts “about a reform package which materially decapitalises the insurance sector.”
“While it’s natural for the private sector to focus on private interests, it’s part of our job to keep an eye on the potential public costs of significant insurance failures.”