UK regulators could be usurped by European supervisors if the Government has failed to negotiate sufficient flexibility for their role within the European regulatory structure.
Speaking during a debate at the Association of British Insurers biennial conference in London last week, Labour Shadow Treasury financial secretary Chris Leslie warned that EU powers could trump the regulatory powers of the Prudential Regulation Authority and the Financial Policy Committee.
He said: “There is a question about the extent the current plans for regulation have been properly thought through in respect of the realities of European supervisory authorities. Did we negotiate sufficient flexibility when these legislative proposals were drawn up, thinking about how they would fit in with that European structure?
“There is a concern that the European supervisors are going to have quite detailed, quite powerful regulatory powers that could trump many of the prudential powers the PRA and FPC are thinking of using.”
Treasury financial secretary Mark Hoban said: “There is a process of regulatory reform going on both domestically and in the EU, so we cannot forget the European dimension. The challenge is getting the balance right so consumers have the appropriate level of protection while recognising how we need to promote an environment in which insurers can prosper.
“Given the funds that insurers have to invest in promoting the economy, we also do not want regulatory change to choke off the flow of funds from insurers. That is a concern for many insurers, particularly in relation to Solvency II.”