HM Treasury extended the consultation period on Phase II of the Future Regulatory Framework (FRF) Review, from January 19, 2021 to February 19, 2021. Additionally, the comment period for the review of Solvency II regime in UK was extended from January 19, 2021 to February 19, 2021.
The Future Regulatory Framework Review was established to determine how the overall approach to regulation of financial services needs to adapt to the new position of UK outside the EU and to ensure the regulatory framework is fit for the future. After focusing on the specific issue of coordination between the UK regulatory authorities in Phase I of the review, the government has now moved to Phase II, which will examine the broader regulatory framework for regulation of financial services in the UK. The consultation proposes an overall approach to the regulation of financial services, built on the existing Financial Services and Markets Act 2000 (FSMA) model, which the government believes should form the foundation of the future regulatory framework. However, at this stage, it does not present a full package of proposals, which will be part of the second stage of Phase II. Under these proposals, PRA and FCA will be responsible for designing and implementing the regulatory standards that apply to financial services firms and markets using their existing rule-making powers in FSMA.
The review of Solvency II regime addresses potential areas for reform that could not only improve the efficiency and effectiveness of the application of the UK prudential regulatory regime, but also allow it to better recognize the unique features of the UK insurance sector. The review of Solvency II will consider how the current prudential regulatory framework can be improved to ensure that it provides for an appropriate amount of capital for the insurance sector, for a high degree of policyholder protection, and for suitable standards of governance, risk management, and transparency. Views are also sought on how this regime can contribute to the climate change objectives of UK government. The October 2020 consultation is the first stage of the review of Solvency II, which will also be informed by the recent international prudential regulatory developments.
Comment Due Date: February 19, 2021
Keywords: Europe, UK, Banking, Insurance, Securities, PMI, Brexit, Solvency II, Future Regulatory Framework, FSMA, Solvency II Review, HM Treasury
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