UK: Corporate Insurance Regulatory Update - July 2011

FSA Policy Documents

CP11/11: Quarterly Consultation Paper No. 29

6 June 2011

CP11/11 consults on various proposed changes to the Handbook including:

  • A new rule confirming that common platform firms conducting investment services and activities from a branch in another EEA state must comply with the host state's requirements under Article 13(2) of the Markets in Financial Instruments Directive in the Senior Management Arrangements, Systems and Controls sourcebook (SYSC) (Chapter 2);
  • The addition of appropriate qualifications for individual advisers and the addition of bodies to the list of accredited body status (Chapter 3);
  • Small changes to liquidity reporting requirements (Chapter 4);
  • Additional guidance on descriptions used to promote financial products (Chapter 5);
  • Guidance on how consumers can cancel ongoing adviser charges for services regarding a financial product without having to withdraw from investments (Chapter 6);
  • Guidance on how claims to the Financial Services Compensation Scheme regarding life insurance policies can be made by some corporate trustees of occupational pension schemes (Chapter 7);
  • Changes to the guidance on property investment clubs and land investment schemes (Chapter 8); and
  • Making the process for submitting written reports to the FSA easier (Chapter 9).

The deadline for responses to Chapter 3 of the Consultation is 6 July 2011. The deadline for all other responses is 6 August 2011.

A copy of the consultation paper can be found at:

GC11/13: Proposed guidance on the: Selling of general insurance policies through price comparison websites

8 June 2011

The FSA has published proposed guidance on selling general insurance policies through price comparison websites because it believes there is a general lack of understanding about the regulated activity conducted by price comparison firms which could diminish the fair treatment of consumers through failure to comply with applicable regulation. The guidance concerns SYSC 6.1.1R and ICOBS 4.1 and 5.2 and it will be most relevant to price comparison websites and Aggregator Business models.

The guidance asks firms to:

  • Ensure they are authorised to carry out (or duly exempt from carrying out) their regulated activities;
  • Do business only with appropriately authorised firms;
  • Check that their disclosure documentations, sales procedures and terms and conditions comply with FSA regulation and the Unfair Terms in Consumer Contracts Regulations 1999; and
  • Introduce and maintain policies and procedures to ensure compliance with regulation and to prevent financial crime together with breaches of the general prohibition and restrictions on financial promotion.

The guidance consultation includes a link to the full text of the proposed guidance and to the cost-benefit analysis of implementing it.

Responses to the guidance consultation should be provided by 5pm on 8 August 2011.

A copy of the guidance consultation and the text of the draft guidance can be found at:

Handbook Release 114

9 June 2011

The Release contains updates as to changes to the FSA Handbook which came into force between 7 May 2011 and 6 June 2011.

The updated sections are as follows:

  • Glossary;
  • Fees Manual;
  • Client Assets; and
  • Supervision.

A full copy of the release can be found at:

Feedback Statement 11/3: Product intervention

14 June 2011

The FSA has published a Feedback Statement which reports on the main issues arising from Discussion Paper DP11/1 – Product Intervention. The latter was intended to stimulate debate on a proposed new approach to the regulation of retail financial services.

FS 11/3 summarises the feedback received in response to the Discussion Paper and sets out the FSA's response to that feedback.

The issues covered are:

  • Product intervention;
  • Market failure analysis;
  • EU context;
  • Supervision; and
  • Development of the regulatory framework.

Further, the Feedback Statement discusses the next steps and expectations for the future, which include the FSA's intention to develop and improve the product governance framework. A copy of the Feedback Statement can be found at:

CP11/12: Financial Crime: A guide for firms

22 June 2011

The FSA has published CP11/12 which opens a consultation on the proposal for a new regulatory Guide for firms in relation to diminish their financial crime risk. The Guide would have the status of FSA guidance rather than setting out rules.

The main objectives of the proposed Guide are:

  • To facilitate firms' understanding of the regulator's current expectations on financial crime systems and controls through transparency. By improving the clarity of existing regulations and principles the Guide offers firms the ability to assess their existing financial crime controls themselves.
  • To offer firms a more concise and manageable guide of relevant FSA statements. However it is not intended to conflict with or replace existing industry guidance such as the Joint Money Laundering Steering Group's guidance.
  • To highlight the FSA's continued commitment to addressing financial crime. With the forthcoming transition of the FSA to the FCA the Guide seeks to reinforce to firms the continued importance regulatory authorities place on financial crime.

The guide includes:

  • General provisions as to systems and controls for minimising financial crime risks.
  • A series of chapters dealing with specific financial crime issues including: financial crime systems and controls, anti-money laundering, terrorist financing, fraud, data security, bribery and corruption, sanctions and proliferation financing. These chapters make reference to the current rules and regulations which apply to firms in relation to the various aspects of financial crime.
  • Guidance arising from recent thematic reviews.

The Guide will be continuously updated to offer firms the most accurate guide on financial crime regulations and expectations.

The deadline for responses to the CP11/12 is 21 September 2011.

A Policy Statement including the final amended version of the Guide along with feedback on this consultation paper will be published in Q4 of 2011.

A copy of the consultation paper can be found at:

Handbook Notice 111

24 June 2011

Handbook Notice 111 outlines the following legislative changes made in June 2011:

  • Extension of the transitional provision allowing certain firms to fully comply with the Remuneration Code rule on retained shares or other instruments to 1 July 2012 (FSA 2011/35)
  • Addition of Holloway policy special application conditions to the Handbook so as to clarify the requirements for exemption from the Retail Distribution Review Adviser Changing the Professionalism rules (FSA 2011/37);
  • Incorporation of the Committee of European Securities Regulators' Guidelines on a common definition of European money market funds within the Handbook (FSA 2011/38); and
  • Minor amendments to the Handbook generally (FSA 2011/34) and with regards to fees, rules and electronic money issuers (FSA 2001/36).

The notice also makes brief updates on the consultative stages of the new legislative material made by the Board this month.

A copy of the Handbook Notice 111 can be found at:

FCA approach document

27 June 2011

The approach document sets out how the Financial Conduct Authority (FCA), which will assume responsibility for protecting consumers and markets' regulation from the end of 2012, will deliver its objectives. The document complements HM Treasury's February 2011 consultation document: A new approach to financial regulation: building a stronger system and HM Treasury's June 2011 White Paper: A new approach to financial regulation: the blueprint for reform.

The issues covered in the approach document are the following:

  • The scope of the FCA;
  • The FCA's objectives and powers as proposed by the government;
  • An explanation of the regulatory approach which the FCA expects to follow in discharging its responsibilities;
  • How the FCA plans to discharge its various functions, including supervision, policymaking, authorisation and enforcement;
  • A summary of FCA's plan to coordinate with other regulatory authorities, in the UK and internationally; and
  • The next steps in implementing the FCA's operating model.

This document outlines initial thinking which will be further refined in the period between now and the end of 2012. The FSA has published the approach document now in order to inform public debate and facilitate stakeholder engagement.

A copy of the document can be found at:

FSA Communication Documents

Retail Distribution Review (RDR) Newsletter – Issue 2

3 June 2011

The FSA published its second newsletter providing key information about the RDR in view of the deadline which is 18 months away and highlighting that business model changes may be necessary for some firms. Peter Smith, the Head of Investments Policy, indicated that the FSA will increasingly monitor certain areas to prevent consumers from being recommended unsuitable products by providers in the run up to the deadline.

The newsletter includes a round-up of the latest news regarding the RDR. This round-up sets out the FSA's proposed changes to the Retail Mediation Activities Return and complaints systems as detailed in CP11/08 and indicates that responses should be submitted by 8 July 2011. It also highlights the fact that the requirement for firms to notify the FSA of competence issues with individual advisors begins in July and that some advisers may need to gap-fill their qualifications to meet qualification requirements.

A section of the newsletter is devoted to dispelling topical myths surrounding the RDR. It focuses on the obligations of discretionary investment managers under the RDR, the requirements for restricted advice, passporting and receiving additional income from Distributor Influenced Funds.

The newsletter ends with a list of items firms should not forget to do and a summary of the RDR timetable.

A copy of the newsletter can be found at:

General Insurance Newsletter - Issue 5

9 June 2011

Julian Adams, Director of the Insurance Division, introduces the newsletter and invites readers to review his speech from the Solvency II event in which he spoke about the FSA's approach to implementation of the same.

The newsletter contains articles regarding the following:

  • The FSA's discussions concerning allegations of discrimination in the market for Solicitors' Professional Indemnity insurance and the need for insurers and firms to guard against such discrimination;
  • The FSA's current thinking regarding Solvency II policy issues and the implementation approach as shared at the conference on 18 April, its planned actions in relation to Solvency II this year and a reminder that insurers and other group companies issuing subordinated debt instruments intended to qualify as lower Tier 2 under GENPRU (and in anticipation of Solvency II requirements for Tier 2) must comply with Solvency II requirements;
  • The FSA's liaison with the Treasury in relation to local law changes following the Test Achats judgment which affects insurers' ability to use gender as a rating factor when pricing risk;
  • A consumer alert published by the FSA in relation to Asset Income Plan Ltd;
  • The FSA's efforts to help claimants trace insurers providing employers' liability cover;
  • The FSA's letter to firms operating an online price comparison model;
  • The Government's introduction of the Consumer Insurance (Disclosure and Representations) Bill;
  • The European Commission's review of the Insurance Mediation Directive and the FSA's joint response with the Treasury to the consultation paper on the same;
  • The FSA's priorities and budget for the year ahead;
  • The FSA's Prudential Risk Outlook; and
  • The FSA's Retail Conduct Risk Outlook.

A copy of the newsletter can be found at:

Life Insurance Newsletter - Issue 5

9 June 2011

Julian Adams, Director of the Insurance Division, introduces the newsletter and invites readers to review his speech from the Solvency II event in which he spoke about the FSA's approach to implementation.

The newsletter contains articles regarding the following:

  • The Government's introduction of the Consumer Insurance (Disclosure and Representations) Bill;
  • The FSA's current thinking regarding Solvency II policy issues and the implementation approach as shared at the conference on 18 April, its planned actions in relation to Solvency II this year and a reminder that insurers and other group companies issuing subordinated debt instruments intended to qualify as lower Tier 2 under GENPRU (and in anticipation of Solvency II requirements for Tier 2) must comply with Solvency II requirements;
  • The FSA's proposals to improve protection for with-profits policyholders and plans to publish its responses to comments received in the recent consultation period and its related policy statement later this year;
  • The FSA's concerns regarding and report on how firms assess the suitability of investment selections for their customers;
  • A consumer alert published by the FSA about a firm called Asset Income Plan Ltd;
  • The FSA's liaison with the Treasury in relation to local law changes following the Test Achats judgment which affects insurers' ability to use gender as a rating factor when pricing risk;
  • The FSA's Retail Conduct Risk Outlook;
  • The FSA's priorities and budget for the year ahead; and
  • The FSA's Prudential Risk Outlook.

A copy of the newsletter can be found at:

Speech by Julian Adams at the PRA Insurance Conference – The Supervisory Approach of the Prudential Regulation Authority (PRA)

20 June 2011

Julian Adams, Director of the FSA's Insurance Division, addressed the PRA Insurance Conference setting out the supervisory approach of the Prudential Regulation Authority (PRA) for the insurance industry.

In his speech, key points addressed by Adams included the following:

  • Objectives – Adams explained that the general objective of the PRA will be to ensure the safety and soundness of firms. The PRA will also have an insurance specific objective of contributing to the protection of policyholders. Accordingly, the PRA will focus on the financial viability of firms and their ability to meet commitments made to policyholders.
  • Framework – the FSA's ARROW process will be replaced with a new framework for the assessment of risks posed by individual firms. Adams noted that the new model will take into consideration a firm's overall impact on the PRA's objectives, along with a number of other factors.
  • Supervision – the PRA's approach to insurance regulation will be forward looking and increasingly judgement-based with an emphasis upon baseline monitoring which the PRA will undertake on all firms.
  • Supervisory interventions – the new framework for proactive intervention will establish a set of trigger points for regulatory intervention. The framework will set out actions expected both of firms' management and supervisors to ensure that risks to the PRA's objectives are minimised.
  • Delivery of supervision – Adams stated that the PRA will employ and develop teams of experienced supervisors. Further, professional third parties, such as auditors and actuaries are expected to play important roles in the assessments of risk under the new framework.
  • Co-ordination with other authorities – the PRA will work closely with the FCA to ensure the success of the overall regulatory system. The PRA will also maintain an appropriate level of interaction with other regulatory bodies, such as the FPC, FSCS and the Pensions Regulator.

A copy of the full speech can be found at:

Speech by Hector Sants – The PRA Insurance Conference

20 June 2011

Hector Sants gave a speech on the new Prudential Regulation Authority (PRA) recognising key distinctions between the insurance and banking sectors and addressing the following areas:

  • Responsibility of the PRA – the PRA will be responsible for the micro-prudential supervision of insurers and banks but has been tasked to recognise the different needs of the insurance industry in this regard.
  • Target date for the formation of the PRA – the government's target date for change is the end of 2012. However, Sants is of the view that the current approach to supervision will progressively change during 2012 to align it as far as possible with the operating model which the PRA will adopt.
  • Insurance specific objective of the PRA – the PRA's objective for insurance will recognize the intrinsic features of the insurance business model. In particular, Sants noted that the PRA's objective will be "to ensure the insurer has a reasonably high probability of meeting claims from and material obligation to policyholders as they fall due."
  • Implementation of the PRA's supervisory approach – Sants spoke of the three main buckets of tools available to supervisors in implementing this approach: (i) rules and regulations; (ii) supervisory oversight of management actions and strategies; and (iii) resolution plans.
  • Key issues – Sants highlighted the need for effective accountability, the need to coordinate with other regulatory bodies and the need to influence the international regulatory agenda as key issues which will arise in the context of the PRA and insurers.

A copy of the full speech can be found at:

Speech: Financial Crime from the FSA to the FCA

22 June 2011

Tracey McDermott, acting director of enforcement and financial crime division, gave a speech addressing the future of financial crime regulations when the FCA assumes responsibility from the FSA in early 2013.

The speech covers areas including:

  • The transition to the FCA;
  • The continuity of the key financial crime objectives;
  • The new consultation paper, CP11/12 Financial crime: a guide for firms, which is designed to act as a guide for firms to assess their own risks in order to diminish financial crimes;
  • The publication of Mortgage fraud against lenders: A thematic review of lenders' systems and controls to detect and prevent mortgage fraud;
  • The publication of Banks' management of high money-laundering risk situations;
  • Details of future thematic reviews including in relation to corruption, bribery, scams and fraud including countering unauthorised businesses such as sham collective investment schemes; and
  • General guidance for firms to consider when assessing their efforts to prevent financial crime.

A copy of the speech can be found at:

Speech: The Future of Insurance Regulation

22 June 2011

Hector Sants, Chief Executive of FSA, gave a speech at the ABI Annual Conference addressing the changes to the UK's regulatory apparatus and the impact the new rules will have on insurance regulation.

Sants addressed the new structure of insurance regulation including the twin peaks approach and the role of the Financial Policy Committee, which has been created to give the Bank of England extensive responsibility for financial stability. He acknowledged that the risk profile of the insurance industry as distinct from the banking sector. Sants noted the contrast between the nature of systemic risk in the context of (i) insurance as an activity, which primarily arises by way of disruption to the economy due to the lack of insurance as a service and (ii) insurers as firms, which risk generally arises due to noninsurance activities of insurers and through links with the banking sector. The former in particular was acknowledged as creating fewer systemically significant than those inherent in the banking industry.

Sants also made reference to the PRA's objective in relation to insurance, namely being "to ensure the insurer has a reasonably high probability of meeting claims from and material obligations to policyholders as they fall due".

The supervisory risk assessment framework of the PRA which will comprise the following key elements: (i) potential impact of a firm coming under stress or failing on policyholders and the financial system; (ii) the risk context in which the firm operates (including at a macroeconomic level); and (iii) factors such as risk management, governance, financial strength and resolvability which determine the safety and soundness of a firm. Sants asserted that whilst this may contain similarities to the ARROW process, supervisors will not become "lost in detail" whilst making assessments.

In addition to the supervisory risk assessment framework, Sants made reference to the framework of proactive "ladder of intervention" prescribed under Solvency II, known as the Proactive Intervention Framework. This is made up of five stages, through which a firm will progress if its financial condition deteriorates.

Sants also addressed:

  • Cooperation with EIOPA and the Commission and the European Parliamentary process in the context of the development of policy which the PRA will implement;
  • The creation by the PRA of dedicated groups for Lloyd's, the Lloyd's marketplace and mutuals;
  • The supervisory role of the FCA in regards to the conduct regulation of firms and the prudential regulation of insurance intermediaries; and
  • Accountability of the PRA and the FCA.

A copy of the speech can be found at:

Speech by Adair Turner, Chairman, FSA - FSA Annual Public Meeting.

23 June 2011

Adair Turner's speech highlighted the FSA's key challenge over the last year namely delivering its current statutory objectives within a still fragile global financial environment while at the same time planning and implementing major organisational change. Structural change will result in two new bodies, the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA), and a new committee, the Financial Policy Committee. Whilst putting these structures into place, the major changes introduced by the FSA over the last three to four years must be built upon, while seizing the opportunity for improved effectiveness which the new structure will provide.

The PRA will build on a revolution in the FSA's approach to prudential supervision over the last three years. Adair Turner gave the example of the report that is currently being produced in relation to the Royal Bank of Scotland's failure. According to Adair Turner, the report illustrates why these failures in regulation, when combined with management mistakes and market-wide delusions, led to the failure of RBS and other Banks, and will show how revolutionary the changes being made now are.

As regards the FCA, Turner confirmed that change will need to build on major initiatives already introduced. In recapping the previous year's achievements, Adair Turner referred to the government's White Paper which commits the FCA to a new more interventionist approach, using a range of intervention tools.

A copy of the Speech can be found at:

Speech by Hector Sants, Chief Executive, FSA – FSA Annual Public Meeting

23 June 2011

Hector Sants summarised FSA's performance in 2010/2011. The FSA has been operating under the following objectives set by the Financial Services and Markets Act, as amended by the Financial Services Act 2010:

  • Market confidence – maintaining confidence in the UK financial system;
  • Financial stability – contributing to the protection and enhancement of stability of the UK financial system;
  • Consumer protection – securing the appropriate degree of protection for consumers; And
  • The reduction of financial crime – reducing the extent to which it is possible for a regulated business to be used for a purpose connected with financial crime.

The FSA also had to achieve certain principal deliverables against their Business Plan. The FSA had set themselves 40 milestones, 90% of which have been delivered in full, and four have been reprioritised.

Sants highlighted the Babel process, Solvency II, the RDR and the Mortgage Market review as four major initiatives undertaken as part of 2010/2011 Business Plan.

Hector Sants stated that despite the challenges of the economic climate, and the additional demands of regulatory reform, the FSA has had a successful year.

A copy of the Speech can be found at:

Speech by Margaret Cole, interim managing director of the conduct business unit - Financial Conduct Authority: A new regulatory approach.

28 June 2011

Margaret Cole gave a speech on how the Financial Conduct Authority (FCA) will approach its responsibilities.

In her speech she focused on the following:

  • The regulatory architecture – The FCA will have a critical role within the new regulatory model and will work alongside the Financial Policy Committee (FPC), the Prudential Regulation Authority (PRA). The FCA will also work closely with the ombudsman service, Financial Services Compensation Scheme and the Money Advice Service.
  • The EU – The FCA must be fully involved in the European Framework and its design and development must be set in this context. The FCA will need to engage effectively at an early stage in EU negotiations to influence the outcomes. " The differences between the FSA and FCA – The FCA will build on the important initiatives the FSA has already started in the last three years but will have some new powers, objectives and duties.
  • Supervision – The FCA's supervisory model is currently being developed and Margaret Cole discussed its main elements.
  • The regulation of markets and wholesale conduct –The government broadly sees the existing markets regulation framework as performing effectively. The creation of the FCA, however, provides an opportunity to take a fresh look at how wholesale conduct issues are addressed and Ms Cole raised several points in relation to this. In conclusion, Margaret Cole stated that during the next 18 months, when the FCA is due to be established, the FCA's operational capability and culture will be determined in order to ensure a smooth transition from the FSA.

A copy of the Speech can be found at:

Speech by Hector Sants, Chief Executive, FSA at the Financial Conduct Authority Conference – FCA Conference.

28 June 2011

Hector Sants gave a speech at the FCA Conference, the purpose of which was to stimulate discussion and feedback from all relevant stakeholders as the FCA's operating model is being developed.

In his speech he focused on five key challenges and trade offs:`

  • Responsibility and suitability – To what degree should individual consumers be held responsible for, and given the freedom to, make their own decisions? Hector Sants stated that the presumption in the FCA's operating model is that this balance should change so that it would be reasonable for the regulator to make suitability judgments on behalf of the consumer so as to better protect the consumer.
  • Intervention and Innovation – Central to the proposed new model is the concept of early intervention. However, intervention can reduce innovation in the market place, potentially reduce choice and competition, and certainly raise the cost of regulation since more resources would be required.
  • Transparency and efficiency – There is a risk that transparency will hamper the regulator's efficiency and potentially lead to problems in the marketplace caused by unintended consequences of consumer actions.
  • Cost and effectiveness – A more interventionist and proactive regulator offers the prospects of greater success but comes with the certainty of extra cost.
  • Accountability and judgement – The trade off here is that regulators should make difficult and forward-looking judgments but inevitably with hindsight some will prove not to lead to the desired result.

In conclusion, Hector Sants encouraged everyone to carefully debate the design of this regulatory framework over the next few months and reach a collective view on the right balance to strike on these difficult issues.

A copy of the Speech can be found at:

FSA Corporate Documents

FSA Annual Report for the year 2010/11

The FSA has published its annual report for 2010/11. The FSA chairman, Adair Turner, made special note of the FSA's achievements and delivery of objectives during the year.

Some key of the developments highlighted by the Report include:

  • " The introduction of the Financial Services Act 2010 which brought changes to the FSA's objectives, powers and duties, including the updated responsibility for the promotion of financial stability as a micro-prudential regulator.
  • " The Government announced that the structure of the FSA will be reformed as follows under the new proposal:
  • the Prudential Regulation Authority (PRA) will be responsible for the prudential supervision of banks and insurers;
  • the remainder of the FSA will be renamed the Financial Conduct Authority (FCA), with a focus on the protection of consumers and markets oversight; and
  • the Financial Policy Committee will be established with the objective of delivering financial stability.
  • The FSA's supervisory approach has progressively developed towards a more interventionist approach, in line with the preventative interaction framework which the PRA will adopt.
  • As part of the FSA's scheme to improve delivery of market confidence, the FSA focused on:
  • establishing standards for firms, issuers and other market participants;
  • monitoring compliance with those standards; and
  • challenging firms and market infrastructure to be well governed, financially sound and to manage their risks effectively.
  • The FSA launched an improved consumer protection strategy with a view to enhancing the level of reliance that consumers can place on financial institutions. In particular, the FSA strived to implement its intensive supervision approach and to make the retail market more effective for consumers, minimize crystallisation of conduct risks and ensure prompt and effective redress for consumers.
  • The FSA progressed in its execution of its credible deterrence approach to financial crime through cross-firm work, supervision of individual firms and the collation of relevant data.

A copy of the Annual Report can be found at

Other FSA Publications

Minutes of the forty-ninth meeting of the FSA Insurance Standing Group (ISG) held on 8 June 2011

8 June 2011

The meeting focused on the Solvency II Day 1 Obligations. It was stated that the European Commission and other Member States are considering concerns regarding the Solvency II timetable and that possible Omnibus II amendments to Solvency II were being negotiated. Two proposed approaches to the timetable for implementation identified at the meeting were (i) bifurcation of the Directive so that changes to supervisory (and EIOPA)

responsibility would commence as at 1 January 2013, but allowing Solvency requirements for firms not to commence until January 2014 and, alternatively, (ii) continuing with plans to implement Solvency II on 1 January 2013, but allowing firms to derogate their SCR during the first twelve months without disclosing the same to the market. It was explained that these proposed changes have come out of the growing concerns around supervisors and firms not being adequately prepared for Day 1, they will be unable to ensure firms have certain necessary approvals.

The proposals were discussed and it seemed that most firms' representatives preferred the bifurcation amendment at (i) above. It was explained that from September to December 2011 the Omnibus II text will be examined by the EU Parliament and in January 2012 there will be a plenary vote of Omnibus II in the EU Parliament.

It was noted however that it is possible that neither of the above proposals will be adopted. It was also confirmed that, despite the above, the current expectation is for the implementation date to be 1 January 2013.

A copy of the minutes can be found at:

Other UK Publications

HM Treasury Consultation – A new approach to financial regulation: the blueprint for reform

16 June 2011

HM Treasury has published a consultation document and a white paper which follow on from earlier consultations in July 2010 and February 2011 and which outline the Government's proposals for regulatory reform and how the Government envisages to give these proposals legislative effect.

The proposed reforms to the regulatory system include:

  • The creation of a macro-prudential regulator, the Financial Policy Committee, to monitor systemic risks and to ensure that these risks are addressed;
  • The transfer of responsibility for prudential regulation to the new Prudential Regulation Authority; and
  • The creation of a focused conduct of business regulator, the Financial Conduct Authority, to control risks in respect of consumer protection, competition and market integrity.

The deadline for responses to the consultation document is 8 September 2011. A copy of the consultation document and white paper can be obtained at:

EIOPA Publications

EIOPA stakeholder groups elect Chairs

20 June 2011

EIOPA has announced that Michaela Koller, Germany, and Chris Verhaegen, Belgium have been elected Chairs of the Insurance and Reinsurance Stakeholder Group and the Occupational Pensions Stakeholder Group respectively.

These stakeholder groups were established earlier this year to facilitate EIOPA's consultation with European stakeholders on issues including regulatory development and the implementation of technical standards.

A copy of the press release can be found at VChair.pdf

Other European Publications

Presidency Compromise Text on the proposed Omnibus II Directive

21 & 24 June 2011

On 24 June 2011 and 21 June 2011, the Council of the European Union published compromise texts on the Omnibus II directive.

The proposals include various changes to the provisions relating to Solvency II, the most significant of which is to delay implementation of the new regime. The text requires member states to transpose the Directive into national law by 31 March 2013, and to apply the provisions from 1 January 2014. The delay in the overall timetable has a knock on effect on the transitional arrangements, with some transitional periods, for example that relating to the requirement to disclose capital add-ons as part of the public disclosure of an insurer's solvency capital requirement, being pushed out to 31 December 2018.

Some requirements would come into force on 31 March 2013, including supervisory approval of ancillary own funds; classification of own funds; approval of firms' proposed changes to modules of the standard formula; approval of full and partial internal models; establishment of special purpose vehicles; and approval of group internal models.

However, the requirements would only apply for assessment purposes, and any approvals granted as a result would not be applicable before 1 January 2014.

In addition, supervisory authorities must require firms to provide an implementation plan by 1 July 2013 providing evidence of the progress towards implementation of Solvency II. The plan would include information relation to technical provisions, eligible own funds, capital requirements, system of governance and processes and procedures in place for supervisory reporting and public disclosure.

The text also amends the scope of Solvency II, excluding Insurers or reinsurers who are in run-off by 1 January 2014 where:

a) The relevant supervisory authority is satisfied that the undertaking will terminate its activity within 3 years of the 1 January 2014 implementation date; or

b) The undertaking is subject to reorganisation measures and an administrator has been appointed; provided the undertaking is not part of a group in which other group undertakings are not in run-off.

Undertakings falling within a) will become subject to Solvency II from 3 years after the 1 January 2014 implementation date if they have not terminated their activity by that time. Those falling within b) will become subject to the requirements from 5 years after the implementation date. In either case, the undertaking must provide their supervisory authority with an annual report on progress towards terminating its activity, and if the authority is not satisfied with the progress, the undertaking may become subject to the requirements earlier.

A copy of the consolidated compromise text is at:

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.