PRA published the policy statement PS21/20 that contains a rule change to increase protection for eligible policyholders of building guarantee policies or BGPs. As part of this amendment, protection will be extended to 100% for protected policyholders of building guarantee policies. PS21/20 amends the Policyholder Protection Part of the PRA Rulebook (Appendix). According to PRA, this instrument may be cited as "PRA Rulebook: Solvency II Firms: Non Solvency II Firms: Non Authorised Persons: FSCS Limit for Building Guarantee Insurance Instrument 2020." The rule change came into effect on October 08, 2020.
PRA is responsible for making rules that govern the operation of the Financial Services Compensation Scheme in relation to deposit-takers and insurers. Rules in relation to insurers are contained in the Policyholder Protection Part of the PRA Rulebook. In certain cases mentioned in the Policyholder Protection 17.2(1)(a), protected policyholders are covered for 100% of any benefit under their contract of general insurance. In all other cases, protected policyholders should receive at least 90% of any benefit under their contract of general insurance. PRA considers that 90% coverage for protected policyholders of a building guarantee policy no longer amounts to an appropriate degree of protection.
PRA defines building guarantee policy as a contract of general insurance providing building guarantee, construction warranty, and/or structural defects cover in relation to newly built, converted, or renovated residential property including, but not limited to, the risk of physical damage and/or defect arising from non-compliance with relevant building or fire regulations or standards. PRA also notes that the ultimate beneficiaries of building guarantee policies have little choice in the selection of their insurer, as the policy is usually provided to property owners by the builder and the policy is transferred to policyholders in onward sales. Under rule changes set out in PS21/20, protection will be extended to 100% for protected policyholders of building guarantee policies.
The policy set out in PS21/20 has been designed in the context of withdrawal of UK from EU and entry into the transition period, during which time UK remains subject to European law. PRA will keep the policy under review to assess whether any changes would be required due to changes in the UK regulatory framework at the end of the transition period, including those arising once any new arrangements with EU take effect. PRA has assessed that the policy would not need to be amended under the EU (Withdrawal) Act 2018.
Effective Date: October 08, 2020
Keywords: Europe, UK, Insurance, Solvency II, PRA Rulebook, Policyholder Protection, Building Guarantee Policy, PRA
The Board of Governors of the Federal Reserve System (FED) published the final rule that amends Regulation I to reduce the quarterly reporting burden for member banks by automating the application process for adjusting their subscriptions to the Federal Reserve Bank capital stock, except in the context of mergers.
The European Banking Authority (EBA) published its assessment of risks through the quarterly Risk Dashboard and the results of the Autumn edition of the Risk Assessment Questionnaire (RAQ).
The Hong Kong Monetary Authority (HKMA) published a circular, along with the reporting form and instructions, for self-assessment, by authorized institutions, of compliance with the Code of Banking Practice 2021.
The Financial Conduct Authority (FCA) decided to register European DataWarehouse Ltd and SecRep Limited as securitization repositories under the UK Securitization Regulation, with effect from January 17, 2022.
The European Commission (EC) published the Delegated Regulation 2022/25, which supplements the Investment Firms Regulation (IFR or Regulation 2019/2033) with respect to the regulatory technical standards specifying the methods for measuring the K-factors referred to in Article 15 of the IFR.
The Bank of International Settlements (BIS) published a paper that assesses the ways in which platform-based business models can affect financial inclusion, competition, financial stability and consumer protection.
The European Supervisory Authorities (ESAs) published the list of identified financial conglomerates for 2021.
The Australian Prudential Regulation Authority (APRA) updated the list of authorized deposit-taking institutions, granting license to Barclays Bank PLC and Crédit Agricole Corporate and Investment Bank to operate as foreign authorized deposit-taking institutions under the Banking Act 1959.
EU published, in the Official Journal of the European Union, a corrigendum to the Delegated Regulation 2015/35, which supplements Solvency II Directive (2009/138/EC).
The European Banking Authority (EBA) published an Opinion on the scale and impact of de-risking in European Union and the steps that competent authorities should take to tackle unwarranted de-risking.