In a joint consultation with the Prudential Regulation Authority (PRA), we are proposing changes to our regime for regulating key individuals in firms subject to the Solvency II Directive. The FCA is also proposing changes to the governance arrangements for Solvency II firms.
Why are we consulting on this?
We are consulting on changes to support the new regime as set out in the November and February CPs. These proposals are intended to create a structure within insurance firms subject to EU Directive 2009/138/EC that will make it more likely that individuals and roles are appropriately matched and that high standards of conduct are observed.
This CP sets out proposals for the changes to the wider FCA Handbook and PRA Rulebook as a result of the proposals in the November CP, transitional arrangements for firms and affected individuals, and the necessary forms for the implementation of the regime. It should be considered in the context of the November (CP14/25) and February CPs (CP15/5). The proposals in this CP may be subject to change as a consequence of responses to this CP or to the February CP.
This consultation is set out in two sections. The first section is joint text published with the PRA, setting out the consequential changes, transitional arrangements and forms required following the FCA’s (CP14/25) and PRA’s (CP26/14) previous consultations on changes that affected Solvency II firms
The second section is FCA only. It sets out FCA proposals for governance arrangements for Solvency II firms, and gives initial feedback to responses to the FCA’s November CP14/25.
Who is this Consultation Paper aimed at?
This consultation affects all firms within the scope of the Solvency II Directive, including Insurance Special Purpose Vehicles, the Society of Lloyd’s, managing agents and UK branches of foreign firms (third-country firms and FCA-regulated European Economic Area firms), and approved persons within those firms. Our separate substantive consultation – CP15/15 – deals with proposals for non-directive firms.
This consultation will primarily be of interest to firms and their approved persons.
What is the background to this?
In November 2014, the regulators set out their proposals on how they intend to reflect the changes brought about by the Solvency II Directive and the Banking Reform Act. In February 2015, the regulators proposed changes to the definition and scope of non-executive directors (NEDs). In this CP we provide the detail for implementing proposals set out in the November CP and consider this in the context of the changes proposed in the February CP.
The FCA welcomes views on all FCA questions listed in Annex 6, including the FCA draft instrument at Appendix 1. The PRA welcomes views on all the PRA questions raised in the CP, including the PRA draft instrument at Appendix 2.
Please send us responses by 15 May 2015 (this is a seven-week consultation period) using the contact details in the paper.
Please send your responses to both regulators at the FCA and the PRA. We will share responses with each other and publicly, unless you make a specific request for confidentiality.
We (the FCA and the PRA) plan to publish final rules and forms in summer 2015.