London’s place as ‘jewel’ under threat, House of Lords calls for reform
London Market needs more “openness and transparency” rather than a ‘one size fits all’ approach, and greater regulatory accountability to enhance its competitive position that’s fit for the future, the powerful House of Lords committee has said.
The House of Lords Industry and Regulators Committee which recently launched an inquiry into the commercial insurance and reinsurance regulation has backed the concerns voiced by the London Market Group (LMG) and recommended UK regulators to “take competitiveness into account without compromising the safety and soundness of the financial system.”
Having listened to market leaders and stakeholders, the Lords has called for the PRA and FCA to adopt a “more collaborative approach” to taking on feedback from stakeholders, encouraging a “two-way dialogue” between regulators and the industry.
“This communication should include opportunities for constructive challenge … Discussions in stakeholder panels should also be more transparent and public,” the House of Lords committee said in a letter recommendations, supporting the LMG’s call for reform.
The Lords also called for a more proportionate and efficient implementation of the current rules, acknowledging that the lack of proportionality can hinder the development of new forms of insurance in the UK, such as insurance-linked securities (ILS).
“The FCA and PRA should regularly review their rulebooks to ensure that they are maintaining high standards in the most efficient way possible to enable the competitiveness of the UK financial industry; such reviews should focus on the scope for more efficient and proportionate as well as less cumbersome and mechanistic engagement between regulators and industry,” Lord Hollick, chair of the Industry and Regulators Committee, said.
Earlier in June last year, the LMS launched a five-point plan to set out the regulatory and legislative changes it feels were necessary to enhance the market’s competitive position.
“It is excellent news for the London Market that so many of the recommendations in the Committee’s letter address the points that we raised,” said Caroline Wagstaff (pictured), CEO of LMG.
“Central to any set of effective reforms will be the implementation of a fully functioning competitiveness duty, which this inquiry has shown is not only possible, but advantageous for the U.K.”
Wagstaff believes the inquiry was an opportunity for the industry to show Parliament its value to the UK economy, but also the challenges it faces.
“Growing global competition means that the London Market’s place as a jewel in the U.K. financial services sector is under threat, and it is vital to take action by producing a regulatory framework that makes us fit for the future,” said.
“These recommendations are a step towards a regulatory system which boosts our competitiveness, brings in new investment and allows our market to fully contribute to the UK’s recovery and future prosperity.”
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