View more on these topics

PRA chief Andrew Bailey attacks ‘shocking’ Solvency II process


Prudential Regulation Authority chief executive Andrew Bailey has hit out at the “staggering” costs of Solvency II and the “shocking” EU process.

In a letter to the parliamentary commission on banking standards chair Andrew Tyrie in February, Bailey wrote that the directive has become “lost in detail and vastly expensive” and will cost the industry billions of pounds to implement.

Solvency II was first designed in 2003 to introduce an EU-wide insurance regulatory regime that replaces previous EU regimes. It aims to strengthen prudential regulation of the insurance sector and ensure policyholder protection by setting out tougher requirements on capital adequacy and risk management.

Bailey estimates consumers will see price rises of 0.1 per cent, insurance firms will see ongoing costs of £200m a year, on top of £400m spent since 2008, while the regulator is set to spend between £5m and £7m a year.

Bailey called for a parliamentary inquiry into the directive to examine the huge amounts spent by firms and regulators with no certainty over new rules because of the lengthy process.

He said: “We have taken action since last summer to deal with this as best we can, and I think the outcome is sensible and pragmatic, but it does not cancel the nature and scale of the issue that the PRA inherits caused by an EU process that makes no allowance for value for money.”

Tyrie said he takes these concerns “very seriously” and pledged to examine them with the Treasury select committee in the coming months.

He says: “Bailey describes the history of the EU decision-making process on Solvency II as ‘shocking’. He is right to do so.

“For the best part of 10 years it has been mired in uncertainty, at great cost to the regulators, insurers and, ultimately, consumers. Solvency II is an object lesson in how not to make law.”



Citizens Advice urges banks to offer payday loan alternatives

The Citizens Advice Bureau is urging high-street banks to offer personal micro-loans to help cash-strapped consumers avoid taking out payday loans.  Chief executive Gillian Guy says banks should take some responsibility for the booming short-term loans industry and should consider introducing low-interest solutions as an alternative. She says: “Banks can step up to the plate by […]

Advisers upset to see Aviva axe direct advice arm

Advisers are disappointed Aviva has become the latest high-profile brand to stop offering face-to-face advice in what is becoming an alarming post-RDR industry trend. Money Marketing revealed last week Aviva not offer face-to-face investment and protection advice for its customers from 31 May. The move will affect around 120 advisers as part of the 2,000 […]

FCA urged to ban cash rebates to Sipps

The FCA is under pressure to push through proposals to apply the ban on platform fund rebates to life companies and Sipps. Last week, the regulator published a policy statement setting out plans to ban cash rebates and fund manager payments to platforms on new business from April 2014. In addition, legacy payments on past […]

Charles Stanley Direct launches clean/bundled fund calculator

Charles Stanley Direct has launched a calculator on its website which aims to show the difference between investing in clean and bundled funds. The calculator has been launched today and requires investors to input their current annual management charge, initial investment amount, anticipated annual growth and the length of time they have been invested. It […]

Tax year-end planning with the family

From the Technical team at Prudential Let’s face it, many aspects of financial planning involve a lot of technical detail. At our face-to-face events, we’ve had great success bringing these technical topics to life through the use of practical case studies. Meet the family Prudential’s Planning Matters hub brings together a fictional family and explores […]


News and expert analysis straight to your inbox

Sign up


There are 4 comments at the moment, we would love to hear your opinion too.

  1. finally, progress???? 30th April 2013 at 11:56 am

    “…caused by an EU process that makes no allowance for value for money”
    Phew – common sense at last?? Lets see the ACTIONS now….
    And, of course, it could also have read:
    “….caused by an FSA process that makes no allowance for value for money”
    – so lets hope he and Martin address that too

  2. Bailey wrote that the directive has become “lost in detail and vastly expensive” and will cost the industry billions of pounds to implement.

    Sound like RDR anyone?

  3. Rip van Snorter 30th April 2013 at 9:52 pm

    The sooner Britain divorces itself entirely from the EU, the better. When are we going to get that referendum? I’ll bet the UKIP won’t waste any time organising one so we can get on and govern ourselves according to our own laws and regulations, unencumbered by all this rubbish from Brussels.

  4. Clearly there needs to be a multi billion pound enquiry into what has gone wrong.

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm