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Written Statements

Volume 682: debated on Monday 19 October 2020

Written Statements

Monday 19 October 2020

Treasury

Future Regulatory Framework and Solvency II Reviews

In the written statement Financial Services Update on 23 June [HCWS309], the Chancellor announced that the Government would commence the next stage of the future regulatory framework (FRF) review and bring forward a review of certain features of Solvency II, the prudential regulatory regime for insurance firms. The Government have today laid the first FRF consultation on the wider regulatory framework for financial services and published a call for evidence as the first stage of the Solvency II review. These reviews reflect the Government’s aim to make financial services regulation better tailored to the needs of the UK economy and its citizens, and to support the UK’s world-class financial services sector.

Following the completion of phase I of the FRF review, which focused on improving co-ordination between the UK’s financial services regulatory bodies, the Government are progressing with phase II of the review, which will examine how the wider regulatory framework for financial services should adapt now that the UK has left the EU. The important and wide-ranging issues raised by this review, combined with the broad range of stakeholders that will be affected, make an in-depth review process appropriate. The Government will therefore consult in two stages, starting with the first consultation published today.

Leaving the EU provides an opportunity to shape our regulatory framework for financial services so that it is more coherent, agile and democratically accountable to support a stable, innovative and world leading financial services sector. The consultation proposes an overall approach that builds on the strengths of the UK’s existing domestic framework by:

Providing a clear and coherent allocation of regulatory responsibilities between Parliament, the Government and the financial services regulators.

Setting out a legislative approach under which Government and Parliament can establish an enhanced policy framework within which the regulators must operate.

Making the UK’s expert, operationally independent regulators responsible for setting direct regulatory requirements on financial services firms and markets, according to the policy framework set by Government and Parliament.

Reviewing accountability, scrutiny and public engagement arrangements, particularly in relation to the financial services regulators, so that these arrangements can be strengthened to reflect the regulators’ expanded responsibilities.

This first consultation is intended to generate a wide-ranging debate about the UK’s overall regulatory approach for financial services. The views gathered through the first consultation will then be used to develop a final package of proposals which will be set out in a second consultation during 2021.

The Government are reviewing Solvency II to ensure that the UK’s prudential regulatory regime for the insurance sector is better tailored to support the unique features of the UK sector and the UK regulatory approach. The review will focus on several specific areas of Solvency II, including the risk margin, matching adjustment, and reporting requirements, but the review will not necessarily be limited to these areas.

The Solvency II review will be guided by three objectives:

To spur a vibrant, innovative, and internationally competitive insurance sector.

To protect policyholders and ensure the safety and soundness of firms.

To support insurance firms to provide long-term capital to support growth, including investment in infrastructure, venture capital and growth equity, and other long-term productive assets, as well as investment consistent with the Government’s climate change objectives.

Both publications are available on www.gov.uk and will be open for responses until 19 January 2021.

The Future Regulatory Framework Review consultation:

https://www.gov.uk/government/consultations/future-regulatory-framework-frf-review-consultation.

Solvency II Review call for evidence:

https://www.gov.uk/government/publications/solvenc-ii-review-call-for-evidence.

[HCWS523]

Home Department

Modern Slavery: Annual Report

Today, I am publishing the 2020 UK annual report on modem slavery. The report covers the whole of the UK and has been drafted in collaboration with the Northern Ireland Executive, the Scottish Government and the Welsh Government. This report sets out an assessment of the scale of modern slavery in the UK and outlines the actions that have been taken to combat it over the last year.

A copy of the report will be available on www.gov.uk and placed in the Libraries of both Houses.

[HCWS521]

Work and Pensions

Private Pensions: Annual Benefit Statements

The Government have published their response to the consultation on the approach to delivering simpler annual pension benefit statements.

Participation in pension saving has been transformed through the success of automatic enrolment. However, there is a growing likelihood that people will have a number of different jobs in their lifetime, and therefore multiple pension pots and annual pension statements.

This is why the Government’s ambition is for pension benefit statements to be simpler, more consistent and jargon free. Consistency across pension benefit statements will help savers better understand their pensions and effectively plan for retirement. A standardised template will be more accessible, drive member engagement and signpost members to detailed information on costs and charges and investment strategy. It will also complement the work Government are doing with the pensions dashboard to bring pensions online to your phone or laptop.

We will focus first on defined contribution schemes used for automatic enrolment, but it remains the long-term ambition to improve consistency across all schemes. We will consult later this year on draft regulations for a mandated approach to simpler statements, working with industry on the detailed design of the regulations and associated statutory guidance.

In addition, the Government will work with the pensions industry to introduce a statement season, building on the success of pensions awareness month. It will support the normalisation of workplace pension saving, provoke debate among the public and enable easier comparison between statements and providers.

These measures will help individuals engage with their workplace pension savings, and enable savers to achieve greater financial security in retirement.

[HCWS522]