The regulator has revealed plans to make executive and certain “controlled functions” at insurers subject to pre-approval in it’s latest consultation paper.
In a 62-page consultation paper, titled Changes to the Approved Persons Regime for Solvency II firms, the FCA stated new rules for people who go through the approved person process will emphasise the importance of treating customers fairly.
The regulator also stated it would consider whether to include non-executive directors within the amended approved persons regime for Solvency II firms, at a later date.
The consultation affects all firms within the scope of the Solvency II directive, including insurance special purpose vehicles, the Society of Lloyd’s, managing agents, UK branches of foreign firms (both EEA and third country firms), and to approved persons within those firms.
Andrew Tyrie MP, chairman of the Treasury Select Committee, said: “The Banking Commission concluded that the application of the approved persons regime in banking was a complex and confused mess.
“It was the worst of all worlds – creating the illusion of regulatory oversight but the reality of none.”
He added that the proposals “which address some of the deficiencies of the approved persons regime” are a “welcome step” towards improving regulatory oversight of senior individuals in insurance.
Mr Tyrie said: “They are going with the grain of the intentions of the Treasury Select Committee and the Banking Commission.
“The crisis showed that there must be much greater individual responsibility in financial services. The amended regime will need to identify who is responsible for what at the very top.
“It needs to operate not as an initial gateway to taking up a post, but rather as a system through which the regulators can ensure the continuing exercise of individual responsibility at the most senior levels.
“Implementation will require the regulators to exercise judgement. In all these respects, today’s proposals are a step forward.
“Moving away from the APR approach and identifying a much smaller group of those who should bear individual responsibility need not mean more regulation. If intelligently applied, it could mean less.”
In July, Mr Tyrie said the ‘approved persons’ regime amounted to little more than a box-ticking exercise.
Responses to the consultation are due by 2 February 2015.
emma.hughes@ft.com
