PRA published a policy statement (PS4/19) that provides feedback on responses to the consultation paper (CP27/18) on adjusting for the reduction of loss absorbency where own fund instruments are taxed on write down under Solvency II. Appendix 1 to PS4/19 contains the final policy of PRA on updating the supervisory statement (SS3/15) on quality of capital instruments under Solvency II. Appendix 2 to PS4/19 includes a reporting clarification on how the adjustments should be reflected in Solvency II reporting templates. The new policy will come into effect for all instruments issued on or after February 21, 2019.
PS4/19 is relevant to UK insurance firms within the scope of Solvency II, the Society of Lloyd’s, and firms that are part of a Solvency II group that will determine and classify capital instruments under the Solvency II own funds regime, together with their advisers. PRA had received six responses to CP27/18. Respondents made a number of observations and requests for clarification which, along with the PRA’s feedback, have been set out in Chapter 2 of PS4/19. Changes to the draft policy have been set out in Chapter 1 of PS4/19. SS3/15 covers the following topics:
- Prohibition on redemption of instruments within five years of the date of issue
- Liability management and capital reduction
- Principal loss‐absorbency mechanism for tier 1 instruments subject to limitation
- Additional considerations for instruments intended to contribute to group own funds
Effective Date: February 21, 2019
Keywords: Europe, UK, Insurance, Solvency II, Loss Absorbency, CP27/18, SS3/15, PS4/19, Reporting, PRA
BIS Innovation Hub published the work program for 2021, with focus on suptech and regtech, next-generation financial market infrastructure, central bank digital currencies, open finance, green finance, and cyber security.
In an article published by SRB, Mairead McGuinness, the European Commissioner for Financial Services, Financial Stability, and Capital Markets Union, discussed the progress and next steps toward completion of the Banking Union.
EBA finalized the two sets of draft regulatory technical standards on the identification of material risk-takers and on the classes of instruments used for remuneration under the Investment Firms Directive (IFD).
EC published, in the Official Journal of the European Union, a notification that the European Court of Auditors (ECA) has published a special report on resolution planning in the Single Resolution Mechanism.
BoE published a scenario against which it will be stress testing banks in 2021, in addition to setting out the key elements of the 2021 stress test, guidance on the 2021 stress test, and the variable paths for the 2021 stress test.
PRA published a consultation paper (CP3/21) proposes rules regarding the timing of identity verification required for eligibility of depositor protection under the Financial Services Compensation Scheme (FSCS).
FSB published the work program for 2021, which reflects a strategic shift in priorities in the COVID-19 environment.
FCA announced that 50% firms have started using the new data collection platform RegData, which is slated to replace the existing platform known Gabriel.
Bundesbank published Version 5.0 of the derivation rules for completeness check at the form level, with respect to the data quality of the European harmonized reporting system.
FED finalized a rule that updates capital planning requirements to reflect the new framework from 2019 that sorts large banks into categories, with requirements that are tailored to the risks of each category.