The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) are considering a new regime under which senior officials working for insurance firms will become increasingly directly responsible for failings by their firms.
The new regime will apply to senior managers with responsibility for running insurance companies, or those who are responsible for certain key functions within the company. However, the new regime will not entirely replace the existing “approved persons” regime, which will still govern those to whom the new regime will not apply.
The approach likely to be adopted by the FCA and PRA is that where an individual has responsibility for a specific area, that manager will be the first in line for questioning in relation to any perceived failures. The PRA will set out the core responsibilities that the senior managers should take, including fitness and propriety, oversight of capital and liquidity, regulatory reporting and integrity as well as the effectiveness of the firm’s whistle blowing procedures.
Whilst the regime will not be identical to that proposed for the banking industry and will not give the FCA and PRA the same powers to prosecute insurance managers criminally for misconduct, it is intended that there will be a suitable level of alignment of the conduct standards for the insurance industry and the banking industry. What is clear in both sectors is that there is a move towards holding senior management increasingly responsible for misconduct.