FSA has published its first two consultations on implementing Solvency II into its rules. The consultations cover:
- The structure of implementation plans: This looks at the European process and the roles of the UK regulators. It then sets out the structure of a new prudential sourcebook for insurers, to be called SOLPRU. The paper looks at the articles that will be transposed, the current rules that will not apply to Solvency II insurers and the new requirements on them. It discusses the discretions Member States have under the Directive, and looks at where it expects Level 2 legislation or EIOPA guidance. The consultation also looks at amendments to other parts of the FSA Handbook necessary to transpose the Directive. The paper summarises the types of firm that will fall within and outside Solvency II.
- How FSA plans to change its rules and guidance on the operation of unit- and index-linked insurance policies, mainly in COBS. The changes would relate only to Solvency II firms, and would take effect when the UK implements Solvency II. The consultation includes a table that maps the COBS rules to SOLPRU.
FSA has also published a cost-benefit analysis on the introduction of Solvency II in the UK. Comments are due by 15 February. FSA plans a feedback statement in mid-2012 followed by a second consultation with further feedback before the end of 2012. (Source: FSA Consults on SOLPRU and FSA Consults on Solvency II and Linked Long-Term Business)