The Prudential Regulation Authority is to have a specific stat-utory insurance objective to contribute to securing an appropriate degree of protection for those who are or about to become policyholders.
The Government’s latest consultation document contains the objective in response to concern the PRA could be too focused on banking regulation.
The insurance objective will sit alongside the regulator’s general objective of ensuring the safety and soundness of individual firms.
The paper also confirms the intention to establish a prompt intervention framework which will put regulated firms into one of five categories, according to the level of risk a firm’s circumstances pose to its viability.
The five stages have “presumed actions” attached to them ranging from normal risk assessment and processes while ensuring workable winding-up plans are in place in stage one to forcing closure in stage five.
The PRA retains a rule-making power but will be required to carry out cost-benefit analyses before it implements any rules, even those originating from Europe over which it has no control. Under the current rules, the FSA has a duty to produce estimates whereas the PRA it will only have to do so where it is “proportionate” to do so.
External complaints made against the PRA will be dealt with by the Bank of England.