More information is needed on how the UK’s two new insurance regulators are going to cooperate, a new International Underwriting Association market group has stated.
The Regulatory Reform Working Party was established by the IUA to debate and comment on the development of a new regime for insurance supervision. It is made up of legal and compliance officers from across the association’s member companies and will be carefully monitoring the establishment of both the Prudential Regulatory Authority (PRA) and Financial Conduct Authority (FCA).
Members of the working party have already met to establish a programme of activity. This will include examining the role of the FCA in the insurance industry, the interaction of both new bodies with other international supervisors and the processes for consultations, complaints and appeals.
The first item on the agenda, however, has been to analyse the relationship and division of responsibilities between the PRA and FCA. A draft ‘Memorandum of Understanding’ has been drawn up to address this question, but it does not contain sufficient clarity and detail, the IUA’s working party believes.
Nick Lowe, the IUA’s Director of Government Affairs, commented: “The Memorandum of Understanding indicates that coordination and cooperation between the FCA and PRA are important.
“However, it does not sufficiently emphasise this vital issue and there a lack of information about how officials will organise this cooperation. There needs to be much more emphasis on how staff at various levels within the two regulators will liaise to ensure that the regulatory burden placed on companies is reasonable, cost-effective and fair.
“In a number of instances it appears that issues concerning the banking sector have been properly worked through while insurance aspects have not.”