Andrew Tyrie MP, chairman of the Treasury Select Committee, has hit out at the European Union decision-making process that has resulted in a decade of debate over long-delayed reforms to insurers’ capital adequacy, saying the process is “an object lesson in how not to make law”.
Mr Tyrie comment’s followed an exchange of letters with Prudential Regulation Authority chief Andrew Bailey on the new rules, which have been delayed a number of times and are expected to cost the industry around £400m a year.
The rules are now not expected to be finalised and brought into national law until at least January 2015, but regulators are running their transition process to the new regime as planned from next year.
Mr Tyrie cites Mr Bailey’s description of the history of the EU decision-making process on Solvency II as “shocking”, saying he is “right to do so”.
Mr Tyrie said: “Strengthening and harmonising the prudential regulation of the insurance sector across the EU could bring significant benefits. But we haven’t seen any yet. Even now, no one can be sure what it will add.
“Sufficient flexibility must be built into any proposals to allow national regulators to exercise judgement. The PRA should implement them in a way which maximises the protection from risk whilst guarding against the temptation to engage in unnecessary gold-plating.”
