On 2 October 2013, Commissioner Barnier published a draft “Quick Fix Directive II”.
You’ll recall that when “Quick Fix Directive I” was adopted by the European Parliament and Council, it amended Solvency II to require the European Member States to:
- Transpose Solvency II into their national laws by 30 June 2013 (instead of 31 October 2012); and
- Apply Solvency II to firms from 1 January 2014 (instead of 1 November 2012).
Quick Fix Directive I was adopted with some reluctance. Solvency II had already been years in the making; and the European Commission, the European Insurance and Occupational Pensions Authority (EIOPA) and the UK’s FSA had been determined that the implementation date would never slip. (The regulators were doing there bit. Firms needed to do more.)
You’ll also recall that Solvency II will only be in its final form when Omnibus II has been agreed by the tri-partite authorities; and adopted by the Parliament and Council. And that it’s only when that’s been done that the Commission and EIOPA can finalise, consult on, and then adopt the level 2 and level 3 measures required to complete the new regime. But Omnibus II has also been delayed for technical and political reasons.
It’s therefore with even greater reluctance that Commissioner Barnier has invited the Parliament and Council to adopt Quick Fix Directive II, which delays Solvency II’s transposition to 31 January 2015, and its implementation to 1 January 2016.
There’s nothing surprising about a small part of this: the market’s long expected that implementation would be delayed until January 2016 (at the earliest). But there’s something very surprising about the rest.
First of all, the Commission seems finally to have accepted the market’s argument that firms need at least a year between publication of the final rules and compliance. (Hallelujah!)
Moreover, Commissioner Barnier is determined that the timetable will not slip again – a determination which is apparently based on assurances received from the Parliament and Council that they will not ask for further delays (Bernier’s press release, which describes these assurances is available here). This is remarkable, not only because of the history; but because the Parliament and Council have apparently given these assurances without voting on them, and without the legal powers they would surely require if they wanted to bind future Parliaments or Council’s. Add in the uncertainty created by next year’s European Parliamentary elections, the personnel changes that have already taken place, and those that are still to come, and it’s clear that implementation from 1 January 2016 remains aspirational at best.
At this stage, it does still seem likely that Solvency 1½ will be implemented in some European countries soon (see my earlier blog on this possibility). But my own view is that Solvency II will not be implemented in anything like its current form in my lifetime. I wonder if others will agree?