There is an uncomfortable irony at the heart of this week's regulatory news, and it is one the insurance industry should sit with for a moment.
On Wednesday 10 June, the House of Lords Financial Services Regulation Committee held a public evidence session on the state of the consumer insurance market. Witnesses told the committee - chaired by Baroness Noakes - that FCA enforcement had failed to keep pace with evidence of poor claims outcomes in home insurance, and that the committee's scrutiny role was essential precisely because the regulator had not acted with sufficient urgency.
Eight days later, Baroness Noakes wrote to the government to say that the Financial Services and Markets Bill - currently in the committee stage of the Lords - had "eliminated" an "integral" part of the UK's regulatory accountability framework. The legislation, she said, removes the requirement for the FCA and Prudential Regulation Authority to explain their actions to Parliamentary committees. It "renders the committee's work ineffective."
The two events are not coincidental. They are the same story told from two directions.
The Financial Services and Markets Bill passed its first two readings in the Lords and is the centrepiece of Rachel Reeves's "regulate for growth" agenda. Its intentions are broadly supported across financial services - including by the insurance industry, which has long pushed for a more proportionate, commercially-minded regulator.
The bill hands ministers a new "statutory power" to give regulators strategic steering, allowing the government to define what growth means in specific regulatory contexts. It also advances the long-awaited reform of the banking ring-fencing regime. These are substantive measures.
What it also does - and what Baroness Noakes objects to - is remove the rule requiring the FCA and PRA to explain their regulatory decisions to Parliamentary committees. The Lords' Financial Services Regulation Committee, which she chairs, previously had the standing to demand that account. Under the new bill, it does not.
Her letter to investment minister Lord Stockwood, penned in her capacity as committee chair, was direct: the change "may not have been the government's intention, it is a matter of concern."
For the insurance industry, the accountability gap the letter identifies is not abstract. It is live and operational.
As Insurance Business reported last week, the Lords committee's ongoing inquiry into the consumer insurance market heard direct criticism of FCA enforcement against poor claims outcomes in home insurance. Matt Scott of Insurance Datalab told peers that enforcement, rather than regulation, was the primary issue - and that the market generates more than £8 billion in annual premiums in conditions where regulatory scrutiny has not matched the scale of the problem.
Matthew Brewis, formerly the FCA's own director of insurance, agreed. Parliamentary scrutiny of the regulator's conduct in this market is not a formality - it is, currently, one of the few external mechanisms pressing the FCA on whether its enforcement actions are commensurate with the evidence of harm.
That mechanism has now been weakened by the very bill intended to make the FCA a better regulator.
This matters because the FCA's insurance agenda for 2026 is more demanding than at any recent point. The regulator's February 2026 Regulatory Priorities for insurance replaced the previous portfolio-letter approach with an outcomes-based framework anchored in the Consumer Duty, placing board accountability for consumer outcomes at the centre of supervisory expectations. It is scrutinising claims handling, outsourced delegated authority arrangements, remuneration structures across distribution chains, and how different sales journeys affect consumer outcomes.
In other words: the FCA is asking the insurance industry to be more accountable, while Parliament is simultaneously making the FCA less accountable. Insurers and brokers are expected to demonstrate fair value, robust governance, and evidence of good consumer outcomes - all of which the regulator assesses and enforces. The Parliamentary committee's job was to assess and challenge whether the regulator was doing that well. The FCA's BIBA regional tour attracts over a thousand brokers precisely because the questions being asked - about delegated authority, Consumer Duty proportionality, and claims oversight - require external pressure to be answered seriously. Parliamentary accountability was part of that pressure.
The Hansard record of the Lords debate on the bill on 8 June puts the problem plainly. The regulators, peers noted, are "masters of the art of wordsmithing documents to make them attack-proof." Parliamentary committees try to grapple with holding them to account, "but it is an uphill battle - and this Bill makes that battle harder."
None of this is an argument against the government's growth agenda. As Insurance Business has covered, the simplification of insurance rules - including the SM&CR reforms confirmed in April - represents genuine progress toward a more proportionate regime. The London Market Association's welcome of the insurance simplification package reflects an industry that has been pushing for exactly this direction.
But the FCA and PRA have been given substantially more rulemaking power under the post-Brexit regulatory settlement. They set the rules, enforce them, and now face reduced Parliamentary scrutiny of whether they have done so well. The accountability gap that creates is not theoretical - it is visible in the committee room where witnesses told peers last week that FCA enforcement against poor home insurance claims outcomes had been insufficient.
The committee has called for urgent discussions with the government before the bill advances further. The Treasury has been contacted for comment. Whether ministers engage substantively with the accountability concern - or treat it as an administrative inconvenience to be managed around - will tell the insurance industry something important about whose interests the regulatory reform agenda is primarily designed to serve.
