The long-awaited bill was introduced to parliament late on Wednesday in a move Chancellor of the Exchequer Nadhim Zahawi described as the “most significant piece of financial services legislation for over a decade”.
The proposed legislation, which stretches to more than 330 pages, will repeal hundreds of pieces of financial services regulation inherited from the EU – including the Solvency II capital rules – and will also place greater responsibility on UK regulators to set requirements for financial services firms and promote growth and competitiveness in the sector.
Speaking to The Insurer TV in the latest Leading Voices episode, Wagstaff welcomed the new growth and competitiveness agenda for UK regulators but emphasised concern over the lack of detail in relation to how these new mandates will be measured by policymakers.
“We’ve been lobbying, particularly for a growth and competitiveness objective for the regulators for a number of years now. So we’re delighted to see that that’s in the bill,” Wagstaff said.
“But I think the concern for us overall is, is there enough detail? Is there enough information about how the regulators are going to be asked to be held to account on that competitiveness objective?”
The legislation – first unveiled as part of the Queen’s Speech at the state opening of parliament on 10 May – includes increased accountability, scrutiny and oversight of the regulators by parliament and HM Treasury. This includes a new “rule review” power which will enable the government to direct the regulators to review their rules where it is in the public interest.
Crucially, controversial “call-in” powers, which would allow the government to intervene in financial regulation when in the public interest, were not included in the bill although HM Treasury acknowledged that these remained “under consideration”.
Wagstaff had previously warned there was a danger the new rules could go largely ignored by regulators unless the government put in place metrics designed to measure their success and held them accountable for delivering on these new duties.
And now the executive – who formally took the reins at the trade body in September 2021 – said that policymakers had failed to address these concerns.
“What we had hoped to see was the objectives that the Treasury is setting. How would the regulators be held to account in this perspective and where is the parliamentary scrutiny to make sure that they are delivering on them?” she said.
“There does not seem to be a very great detail in the bill on that. We think that’s very worrying. We’ve always said the devil is in the detail, and we’re not sure it’s there right now.”
The LMG has been campaigning for concrete changes that will allow the London (re)insurance market to seize new global market and trade opportunities post-Brexit and earlier this year Wagstaff secured a major victory for the sector after an influential House of Lords committee backed the industry’s request for the UK’s Financial Conduct Authority and Prudential Regulation Authority to be handed a competitiveness agenda.
Giving evidence to the House of Lords Industry and Regulators Committee inquiry in January, Wagstaff said London’s share of the global insurance and reinsurance market had been “broadly stagnant” for the past decade and warned it might fall if there was not a cultural shift in how regulators engage with the market.
But Wagstaff also stressed London (re)insurers are not advocating a “regulatory race to the bottom”, adding that the strength and rigour of oversight is one of its attractions to buyers.
“The strength of UK regulation is a real sort of selling factor for the London market, and for the City of London, overall. But what we’ve said, and what we hear a lot from our members, is there is a lack of proportionality in the way that regulation happens,” Wagstaff explained.
“The London market is a wholesale market, our customers are sophisticated buyers, they have fleets of fantastic brokers advising them, they often have insurance expertise in house – they don’t need the same protection as an individual consumer who’s buying caravan insurance from an aggregator site.
“We really hoped that this bill would be an opportunity for the regulators to think about our competitive position in the world,” she continued.