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European supervision could overtake UK regulation

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.”

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. Julian Stevens 1st July 2011 at 12:46 pm

    Hoban talks glibly about “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.” Nothing at all though about any measures to reduce the increasingly intolerable bureacratic and financial burdens being heaped on the intermediary sector.

    Despite Hector Sants’ claims to the contrary before the TSC, it’s getting very hard not to feel that we’re a species earmarked for extermination.

  2. Simon Mansell 1st July 2011 at 1:20 pm

    It would seem that the FSA conspires against UK IFA’s as they have confirmed they will not be applying the RDR rules to firm’s exercising Article 31 rights in their draft notification to the EC (ref CP09/18 Ann B pars 26 and 51).

    However, EEA investment advisers will be able to provide investment advice to UK customers under the more relaxed MiFID regime, but UK advisers will be restricted under RDR!

    The FSA is a badge of a country in decline determined to accelerate that decline as fast as possible.

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