Bank of England says shake-up of insurance rules increases risks
The Bank of England on Monday warned that a much-heralded overhaul to insurance rules “increases risk” and could result in a corporate failure that ultimately hits the public purse.
The BoE’s top officials also sounded alarm bells about other aspects of the government’s sweeping plan to turbocharge the City of London’s growth, warning that some of the changes could jeopardise financial stability.
The comments from BoE governor Andrew Bailey, and Sam Woods, head of its Prudential Regulation Authority, came a month after UK Prime Minister Rishi Sunak’s government unveiled a package of 30 reforms to make the UK’s financial sector more competitive now that it no longer has to follow the EU’s rule book.
The changes to Solvency II — the regulatory regime that governs insurers’ capital — have been the most contentious element of the government’s reform package, inspiring clashes between Treasury officials and the UK’s top regulators.
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