A Brexit row has erupted after the Bank of England was accused of “dragging its feet” over cutting European Union red tape, as well as “holding back investment and reducing the UK’s competitiveness”.
Britain officially left the EU on January 1, 2021 when the agreed transition period ended and a post-Brexit trade deal between the two sides came into force.
The Bank’s Prudential Regulation Authority (PRA) has told insurers that key aspects of Solvency II reform will not be implemented until at least early 2025.
Documents published last week state this is to ensure an orderly transition away from the current set of rules.
But senior Tory MPs – including former Business Secretary Jacob Rees-Mogg – have lashed out over the prolonged timeline from the PRA and have accused regulators of not acting quickly enough in axing swathes of EU-era regulation.
Mr Rees-Mogg said: “The PRA is a consistent obstacle to reform and continues to drag its feet. It is holding back investment and reducing the UK’s competitiveness.”
The EU introduced the rulebook in 2016, requiring UK insurers to hold vast amounts of sums on their balance sheets.
The PRA had previously insisted it was determined to ensure any easing of the regulatory burden does not create a risk to policyholders or to the stability of companies, but also warned against sweeping changes that could “decapitalise” the industry sector.
Before the Tory leadership contest began in the summer, Rishi Sunak held talks with insurance bosses and insisted he wanted to deliver Solvency II reforms “at pace”.
An industry source close to the BoE said the PRA has delivered its first phase of Solvency II reporting reform which has “significantly reduced reporting for small and medium firms”, according to the Sunday Telegraph.
The UK Government has finished its own consultation on Solvency 2 and promised it will use the Financial Services and Markets Bill to reform the rulebook.
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Source: Brexit row explodes as Bank of England ‘dragging its feet’ on cutting EU red tape