Luke Holloway gives a regulatory update from across the insurance profession
ABI makes Budget submission
Prior to the UK Budget, the Association of British Insurers (ABI) set out a five-point plan for how the insurance and long-term savings profession can work constructively with the government to deliver on its ‘levelling up’ agenda, boost global competitiveness, unlock infrastructure investment, support the transition to net zero and strengthen the financial resilience of households and businesses across the UK.
The UK’s insurance and long-term savings sector is the largest in Europe and fourth largest in the world, adding £29.1bn a year to the UK economy, managing investments of nearly £1.7trn and paying more than £16bn in taxes.
As the ABI’s Budget submission was announced, the ABI director general, Huw Evans, commented: “Determined reform of financial services regulation inherited from the EU could unlock nearly £1trn over 15 years that could be invested in the UK’s transition to net zero. It is critical that this potential is not diluted by increases in corporate taxes, either as a result of global agreements or domestic drivers.
“Freezing the rate of Insurance Premium Tax, which hits the poorest the hardest, maintaining adequate investment in flood defence infrastructure and simplifying pensions tax relief to encourage greater saving, would all help this Budget and Spending Review lay good foundations for the country’s recovery from the impacts of Covid-19 and enable our sector to play its fullest part in support.”
FCA launches fair-value rules
The Financial Conduct Authority’s (FCA) fair-value rules on protection came into effect on 1 October.
All insurers – including protection providers – must gather evidence to show their products offer consumers fair value under the new product governance rules.
Insurers have until 30 September 2022 to complete their first annual fair-value assessments. As part of ongoing work to ensure consumers receive fair value, the FCA examined how firms designed, sold and reviewed products to ensure they met the needs of their customers.
The findings showed that not all firms had made progress in meeting the FCA’s existing rules and guidance on product governance and value, issued in 2018 and 2019, as well as temporary guidance the FCA issued in response to Covid-19 last year.
The new rules are part of a wider package of remedies introduced by the FCA to tackle the loyalty penalty and ensure that firms focus on providing fair value to all their customers.
Diversity discussion paper
The joint diversity and inclusion (D&I) discussion paper from the Prudential Regulation Authority (PRA), the Bank of England and the FCA has now closed. Since July, the regulators have been engaging financial firms and other stakeholders in discussions on how they can accelerate the pace of meaningful change on D&I in the sector.
The FCA said it recognised that the financial sector has taken steps forward on D&I, but felt there is still more to be done to create truly diverse and inclusive organisations that meet the diverse needs of those they serve.
The discussion paper followed recent expectations set out in the FCA’s guidance for firms on the fair treatment of vulnerable customers and research from its Financial Lives 2020 survey.
The discussion paper also set out the regulators’ thinking on the collection and reporting of diversity data and outlined plans for a voluntary pilot data survey. In October, further to the discussion paper, the FCA sent the survey to all FCA and PRA dual-regulated firms, a sample of FCA solo-regulated firms and a selection of Financial Market Infrastructures for input.
Luke Holloway is editor of The Journal