The British government announced last year that from 2012 the role of the Financial Services Authority (“FSA”), the UK’s insurance industry regulator, would be split between the Bank of England, which will supervise insurers under the new Prudential Regulatory Authority (“PRA”), whilst the conduct of insurance business will be the responsibility of the new Financial Conduct Authority (“FCA”). The FSA will disappear.
The Government has begun to outline its thinking on the wider powers which will be granted to both the PRA and FCA in a series of consultation papers proposing a radical new approach to the regulation of the insurance sector.
The most recent proposals were published at the end of June 2011 which sets out the “tougher, bolder” approach of the FCA which, in contrast to the FSA, will actively “seek to identify” insurers likely to pose a risk to the market and exercise early powers of intervention to deal with “potential risks” in terms of conduct and products before they crystallise with “naming and shaming” by publication of the name of market miscreants, even while they are under investigation.
For more information, go to http://www.fsa.gov.uk/pubs/events/fca_approach.pdf, “The Financial Conduct Authority: Approach to Regulation” June 2011. In the meantime, please contact Patrick Devine and Mark Pring of the London office if you would like further information on the proposed new UK insurance regulatory regime.