‘Regulator’s staffing problems could jeopardise Solvency II’
Staffing problems at the PRA could hinder the implementation of Solvency II, according to the regulator’s strategy for 2015/16.
The regulator has said the implementation of the directive in 2016 will be one of its main focuses over the course of the year.
Andrew Bailey, chief executive of the PRA, said the introduction of Solvency II is the single biggest change in insurance supervision for a generation.
But the PRA Strategic Report for 2015/16 said this could be under threat if the regulator failed to attract talented staff, which it said was a risk to the delivery of its plans.
It said: “The PRA needs to be able to recruit high-quality people in a range of disciplines and with the right technical expertise; this is critical to the delivery of work streams such as Solvency II and stress testing where expert technical knowledge is required.
“The PRA has faced an increase in market demand for expertise, and consequently retention of staff remains challenging.”
Last year the National Audit Office raised concerns about the PRA’s staff turnover, which has been as high as 15.4 per cent. According to Mr Bailey, the turnover rate at the PRA fell from 11.6 per cent to 10.6 per cent over 2014/2015.
Coming into effect on 1 January 2016, Solvency II will direct insurers across Europe to ensure they have enough reserve funds to cover all insurance claims they are likely to receive.
Mr Bailey said: “The largest single initiative for the PRA is the finalisation and implementation of the Solvency II Directive for insurers by the beginning of 2016.
“This is a major change which will introduce a going-concern, forward-looking, risk-based prudential regime for insurers that is consistent across the EU.”
Mr Bailey added: “We have worked with the rest of the Bank to harmonise the terms and conditions of employment, and we have developed plans for a new Central Bank qualification to equip the next generation of supervisory talent.”
When approached, the ABI declined to comment.
Adviser view
Dennis Hall, chief executive of London-based Yellowtail Financial Planning, said: “When you are a regulator you are continuously fighting a losing battle, and the press isn’t great.”
