HM Treasury has published its proposals for reform under the ongoing Financial Services Future Regulatory Framework (FRF) Review, and insurance bodies in the UK have been quick to offer their insights.
“BIBA very much welcomes the HM Treasury’s new consultation: Financial Services Future Regulatory Framework Review: Proposals for Reform, which has a proposal from government to introduce a new growth and international competitiveness objective,” commented Graeme Trudgill, executive director of the British Insurance Brokers’ Association (BIBA).
“This has been a core part of the last four BIBA Manifestos, so we are delighted to see such a positive direction of travel. We also support Government’s proposal that the FCA (Financial Conduct Authority) report on their performance against their growth and competitiveness objective on an annual basis.”
The new 75-page consultation paper – which makes a series of proposals aimed at delivering the intended outcomes of the FRF Review – sets out the response of the government to the feedback gathered from October 2020 to February 2021. The second consultation will close next year, on February 09.
London & International Insurance Brokers’ Association (LIIBA) chief executive Christopher Croft, meanwhile, had this to say: “These proposals provide many of the right ingredients for a vibrant commercial insurance sector to flourish in global markets, but the proof will be in the pudding that Government and regulators bake from these.
“As most of our members’ business is international, we particularly welcome the proposal for a specific ‘growth and competitiveness’ mandate for the regulators. And it is especially welcome that this is to be an objective with teeth in that FCA will be asked to report on its adherence to it annually.”
As of this writing, the Financial Conduct Authority has not issued a statement in response to the newly released policy document.
“Exports by Lloyd’s brokers in London’s specialty insurance market generate a contribution of around £37 billion to UK GDP (gross domestic product), one quarter of the contribution made by the City of London as a whole,” added the LIIBA CEO.
“We face significant and growing competition from the other centres and from emerging markets. The current regulatory framework has evolved into a disproportionate regime that has added unnecessary burden and cost to the commercial insurance sector, particularly for those serving large, complex, and international clients.”
Croft went on to commend the Treasury for seeking to design a regime that he believes will maintain the UK’s global competitiveness and export revenues. In LIIBA’s view, said Croft, this approach is a step in the right direction.
London Market Group (LMG) chief executive Caroline Wagstaff also had positive remarks in relation to the review, which was set up to examine how the financial services regulatory framework should adapt to be fit for the future, particularly in the context of the UK being no longer part of the European Union.
Wagstaff stated: “The speciality commercial insurance industry, along with many other sectors of the financial markets, has highlighted the need for a competitiveness remit for the PRA (Prudential Regulation Authority) and FCA for some time. It will maintain robust regulatory protections while enhancing our global offer.
“We are pleased that the government has listened to the London Market Group and our members’ long-running campaign that this is best achieved through a statutory objective for the regulator – this will send a positive message to the world that the UK is open for business and welcomes new investment and trading opportunities.”
To help develop the proposals further, Wagstaff said the LMG will continue to work with the government and across the commercial insurance sector in the next phase of the consultation.
Comments from the Association of British Insurers (ABI), however, indicate that the trade body isn’t entirely pleased with the proposed changes, which it views as inadequate.
“The second consultation on the Financial Services Future Regulatory Framework Review has the right intentions towards creating a regime that is fit for purpose, but it could have gone further,” declared ABI director general Huw Evans. “If the government wants the UK to compete on the global financial stage, then we need a regulatory framework that matches the same vision.
“It’s disappointing to see the consultation published today (November 09) recommends a new growth and international competitiveness objective that will only be a secondary objective for the PRA and FCA. This does not go far enough, as regulators will always put primary objectives above secondary ones.”
Evans continued: “We have a unique opportunity to boost competitiveness, attract overseas capital, and promote the UK as a world-leading financial services hub, but unless regulators have economic growth as a primary objective, we are not convinced anything major will change.”