A New Approach To Insurance Regulation

The Government has today published its consultation proposals for reforming regulatory structures in the UK.

This consultation builds on the announcement made on 16 June by the Chancellor of the Exchequer George Osborne that the Government had decided to give the Bank of England control of macro-prudential regulation and oversight of microprudential regulation. In that speech the Chancellor announced that the Government plans to:

  • Create a new prudential regulator (the Prudential Regulatory Authority), which will operate as a subsidiary of the Bank of England. It will carry out the prudential regulation of financial firms, including banks, building societies and insurance companies;
    establish a new Consumer Protection and Markets Authority, which will regulate the conduct of every authorised firm providing services to consumers and will be responsible for ensuring the good conduct of business in the UK’s retail and wholesale financial services; and
  • Create an independent Financial Policy Committee at the Bank of England, which will have the tools and the responsibility to look across the economy at the macro issues that may threaten economic and financial stability and take effective action in response.
  • Hector Sants, the FSA Chief Executive, will oversee the transition and will become the first new deputy governor and chief executive of the new prudential regulator in 2012, supported by Andrew Bailey from the Bank of England as his deputy.

The Chancellor said that the process will be completed in 2012.

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