Chancellor of the Exchequer George Osborne has given ground to industry demands that insurance should be treated separately to banks under the government’s new regime for financial services regulation.
The Treasury’s draft bill on financial regulation, published today, includes a specific statutory objective governing the Prudential Regulation Authority’s responsibilities for the insurance sector.
In his Mansion House speech, which took place last night, Osborne said: “I’ve heard your argument that insurance companies face different risks, so I can announce that we will set a specific statutory objective for them.”
The ABI has been lobbying extensively for the PRA not to straightjacket the insurance sector in rules designed for the banks.
The bill, which takes forward the government’s pledge to scrap the FSA, also includes an updated and enhanced competition regime under the Financial Conduct Authority and steps to strengthen the handling of cases of widespread consumer detriment, including misselling.
The government has said it hopes to introduce a bill later this year after securing feedback on the draft legislation.
Announcing the bill earlier today, City minister Mark Hoban said: “Launching the proposals, Financial Secretary to the Treasury Mark Hoban MP said: “This is a key milestone in the process of developing and implementing a new system of financial regulation, which will address the flaws in the ‘tripartite’ model that contributed to the financial crisis. This is a detailed blueprint for regulatory reform setting out how the new structure will work. This Government is determined to strengthen the financial system and to do so in a way that gets it right - that’s why we’ve worked hard to consult with a wide-range of stakeholders over the last year. We look forward to working with stakeholders and Parliament during the period of pre-legislative scrutiny.”
The draft bill and white paper follow two detailed consultations on financial regulation.