Screengrab from the evidence session streamed by Parliamentlive.tv
Prudential Regulation Authority (PRA) chief executive Sam Woods (pictured), whose camp has a different view from that of the government in terms of how insurers should invest under proposed reforms, wouldn’t outright recommend to Parliament that the proposals be turned down but asked that regulators’ arguments be considered.
At Monday’s oral evidence session held by the Treasury Committee, Woods said: “I’m not urging Parliamentarians [to vote against the proposals]. I think Parliamentarians should, when it comes to the Parliamentary part of that process... look at the arguments that we have made on one side of this debate.”
The PRA isn’t too keen to loosen the restrictions on where insurers can direct capital, while the government looks to release billions’ worth of investment into the UK economy.
Woods also said during the Treasury Committee meeting: “I think the government would acknowledge that the reform package, as a whole, increases risk. And the government is doing that because the government believes that that will also aid growth, and that’s the trade-off that the government has made.”
When asked to elaborate on the risk he was referring to, the PRA chief clarified that “it’s much more of a policyholder protection issue” than an issue of financial stability.
“Ultimately,” explained Woods, “what will happen here, if it turns out that this was a problem that should have been addressed... then the way it comes home to roost is there is not enough capital backing pensions.”
He also told the Treasury Committee: “It is a very broad [reform] package – there’s a whole bunch of other stuff in there which we’re very keen to get on with.”
Also present during the session were Bank of England (BoE) governor Andrew Bailey and BoE financial policy committee external members Jonathan Hall and Dame Colette Bowe.
