PRA Consults on Audit of Public Disclosure Requirement for Solvency II
PRA published the consultation paper CP8/18 related to the external audit of the public disclosure requirement under Solvency II. CP8/18 sets out the PRA proposal to amend the rule that requires the external audit of parts of the Solvency and Financial Condition Report (SFCR). PRA proposes that any amendments would be effective for financial years ending on, or after, November 15, 2018. Comments are requested by July 11, 2018.
SFCR is the key public disclosure under Solvency II and is intended to enhance transparency and comparability, through the disclosure of essential information on the solvency and financial condition of a firm. PRA estimates that the proposed amendments would remove the SFCR external audit requirement from the end of 2018, for more than 150 smaller UK Solvency II firms (including mutuals) and groups. PRA considers that this change would improve the proportionality of the requirement. PRA developed the proposals in CP8/18 as part of its work on reviewing aspects of the insurance prudential framework, in light of its experience following the implementation of Solvency II in the UK.
PRA first consulted on the requirement for elements of SFCR to be subject to external audit in CP43/15 and CP23/16. Then, it made the rule with effect for financial years ending on or after November 15, 2016. Following the implementation of the rule and the first year of public disclosure, PRA collected quantitative data from UK Solvency II firms on audit costs incurred and met with stakeholders such as audit firms, investors, insurers, and insurance trade bodies. In light of the findings, PRA made the proposals in CP8/18. CP8/18 is relevant for all UK Solvency II firms (including mutuals), auditors, and users of SFCRs.
Related Links
- Press Release
- CP8/18 (PDF)
- CP43/15 and CP23/16
- Series of Improvements to Implementation of Solvency II
Comment Due Date: July 11, 2018
Keywords: Europe, UK, Insurance, Solvency II, SFCR, External Audit, Public Disclosure Requirement, CP8/18, PRA
Featured Experts
Adam Koursaris
Asset and liability management expert; capable modeler; risk and capital specialist
Cassandra Hannibal
IFRS 17 subject matter expert; actuary; risk management and capital projection specialist
Jerome Ogrodzki
Insurance asset and liabilities modeling specialist; stochastic modeling expert
Previous Article
EBA Single Rulebook Q&A: Fourth Update for April 2018Related Articles
PRA Publishes Q&A on Property Valuation Requirements Under CRR
PRA published a set of questions and answers (Q&A) covering common queries regarding residential and commercial property valuations, for the purpose of the Capital Requirements Regulation (CRR), during the period of disruption caused by COVID-19 pandemic.
IOSCO Consults on Outsourcing Principles for Operational Resilience
IOSCO proposed updates to its principles for regulated entities that outsource tasks to service providers.
MAS Consortium to Develop AI Fairness Metrics for Credit Scoring
MAS announced that the first phase of the Veritas initiative will commence with the development of fairness metrics in credit risk scoring and customer marketing.
BoE Updates Definitions for BTL Data Collection
BoE published the Statistical Notice 2020/4 to update the buy-to-let (BTL) Phase 2 and Phase 3 definitions for the Interest Rate Type data item.
FSI Examines Financial Stability Implications of Payment Deferrals
FSI published a brief note that examines challenges facing the banking sector as a result of the payment deferral programs put in place to support borrowers affected by the COVID-19 pandemic.
PRA Finalizes Policy on Prudent Person Principle Under Solvency II
PRA published the policy statement PS14/20, which contains the supervisory statement SS1/20 and the feedback to responses to the consultation paper CP22/19 on expectations for investment by firms in accordance with the Prudent Person Principle, or PPP, as set out in the Investments Part of the PRA Rulebook.
EBA on Extending Large Exposure Limits for French Systemic Banks
EBA published an opinion following the notification by the French macro-prudential authority, the Haut Conseil de Stabilité Financière (HCSF), of its intention to extend a measure introduced in 2018 on the use of Article 458(9) of the Capital Requirements Regulation (CRR).
ECB Highlights NPL Resolution as Key Policy Issue in Post-COVID Europe
As part of a Research Bulletin on the recent policy-relevant work, ECB published an article that examines the lessons learned from past crises for nonperforming loan resolution in the post COVID-19 period.
RBNZ Publishes Financial Stability Report for May 2020
RBNZ published the financial stability report for May 2020. This review of the financial system in the country highlights that the economic disruption associated with COVID-19 will present challenges to the financial system.
ECB Updates Guidance on Reporting of Securities Holdings Statistics
ECB updated the guidance notes for reporting related to the statistics on holdings of securities by reporting banking groups (SHSG).
