One of the questions that a number of people have asked recently is where we have got to with the proposed European Market Infrastructure Regulation, otherwise known as EMIR.

As some of you may remember, at the European Parliament plenary session of 4 July 2011, EMIR was debated and the report on the proposal prepared by rapporteur Werner Langen was approved. However, the European Parliament postponed the final vote on EMIR to allow more time for negotiations with the Council of the European Union (the Council). This retained the possibility of a first reading agreement between the European Parliament and the Council.

At that stage the official line was that EMIR would be finalised at some stage in September 2011. However, in September there were further compromise proposals from the Presidency of the Council and at the time of writing this article (23 September) there was no agreement.

On 22 September, the UK House of Commons European Union Scrutiny Committee published its 41st report. Among the many items covered in this report was the progress of EMIR which was covered in a letter that the Committee had received from the Financial Secretary, Mark Hoban MP. The letter made the following points:

Whilst there are still some outstanding issues that need to be resolved between the Council and the European Parliament, I would expect EMIR to be settled by the end of October 2011.

In June 2010 the UK Government announced the creation of an Independent Commission on Banking (the ICB) which was to formulate policy recommendations designed to reduce systemic risk in the UK banking sector and promote competition.

In April this year the ICB published its interim report and this has now been superseded by a final report published on 12 September 2011. Like the interim report the final report recommended the retail ring fencing of UK "banks" (all types of deposit takers including building societies) but not total separation, increased capital requirements above Basel III and certain competition measures.

There has been some debate as to whether or not the retail ring fence applies to overseas banks in the UK and the position appears to be as follows: The basic principle is that the requirement to comply with the ring fence should apply to anyone carrying on a retail banking business as a "distinct legal entity" with permission from the UK's regulator (currently the FSA). The crucial point here is the words "distinct legal entity" which would include any standalone UK bank, any UK bank which is part of a wider banking group headquartered in the UK and any UK bank which is a subsidiary of a wider banking group headquartered overseas. UK branches of European banks would not be subject to the ring fence as a banking entity incorporated in one member state is entitled under European law to branch into another member state using its home licence (so called passporting).

In relation to third country banks in the UK, the ICB states that these could also provide retail banking services but that any such "significant" banks would generally be required to establish a UK subsidiary. It is not clear what the ICB means by the word "significant" as there is no de minimis exemption from the ring fence principles. However, some guidance might be taken from the recent joint paper published by the FSA and the Bank of England on the proposed new UK prudential regulator, the Prudential Regulation Authority (PRA) which stated that the PRA would allow a branch of a third country bank in the UK where it was satisfied that its supervision in its home state was broadly equivalent to that of the PRA and on which the PRA could rely. If not satisfied, the overseas institution would be required to set up a subsidiary. To my mind it would make sense if the same principle were applied to the ring fencing of third country branches.

The final report also states that the ring fence requirements would not apply to the overseas subsidiaries of UK headquartered banking groups unless they were subsidiaries of a ring fence bank.

Given the fundamental nature of its recommendations the ICB has suggested a fairly lengthy implementation date of the start of 2019 (the start of Basel III). However, the UK Government is keen to move forward and has argued for the need to legislate the main recommendations in this session of Parliament, even if implementation is delayed until after the 2015 election. However, whether this will be possible remains to be seen.

These are difficult times for motorists. The price of fuel has reached astronomical levels in the past year and motor insurance premiums are reported to have risen by as much as 40% in the year ended 31 March 2011. As motoring has become one of the most expensive household costs in the UK, the motor insurance industry has come under closer scrutiny. In September 2011 the Office of Fair Trading (OFT) issued a call for evidence to establish the background to the rise in motor premiums, and Member of Parliament for Blackburn, Jack Straw, has introduced a private member's Bill (the Motor Insurance Regulation Bill 2010-11) with the aim of reforming the regulation and operation of the motor insurance market.

In addition to establishing the reasons for the increase in car insurance premiums, the OFT's investigation is designed to identify any consumer and competition issues that need to be addressed to improve the functioning of the motor insurance market. At this stage, the OFT is asking insurers and other stakeholders for their views on a number of aspects of the private motor insurance market that may raise competition and consumer issues, including:

Whilst the OFT is still investigating the rising cost of premiums, the Motor Insurance Regulation Bill was introduced into the House of Commons on 13 September 2011. When introducing the Bill, Jack Straw gave his own opinion on the root of the price hike. According to Straw, the principal reason for the increase is the extraordinary rise, in both number and value, of personal injury claims. As the rise has coincided with a reduction in the number of road traffic accidents reported, this suggests that the increase in claims has been artificially generated by a claims industry.

Problems with motor insurance claims have already been identified in an Association of British Insurers' (ABI) paper entitled Tackling the compensation culture: the Legal Aid, Sentencing and Punishment of Offenders Bill, which advocated the full implementation of the recommendations set down by Lord Justice Jackson in his report on reforms to the compensation system. The ABI paper suggested that whilst the Legal Aid, Sentencing and Punishment of Offenders Bill goes a long way to meeting Lord Justice Jackson's objectives, the Government should move to tackle disproportionate costs by banning the receipt and payment of referral fees. The Government has now signalled its acceptance of one of the fundamental propositions of the Motor Insurance Regulation Bill, under which it will be unlawful to solicit, offer or pay a referral fee relating to a personal injury road traffic claim.

Amongst other changes, the Motor Insurance Regulation Bill aims to make it significantly more difficult to claim for whiplash injuries (which account for 80% of motor claims) by establishing new standards relating to the evidence required and damages payable. Some jurisdictions restrict the payment of damages for whiplash to claims where there is clear objective evidence that real injury has been suffered. Essentially, the Bill provides for the introduction of the requirement for such objective evidence in the UK.

The Bill will also look to prohibit insurers from isolating the level of risk arising from personal injury claims to an area smaller than Wales, or a standard English region. The measure is intended to prevent postcode discrimination whereby insurers price risk based upon the insured's home address.

Many of the Bill's recommendations should result in lower costs for insurance companies and, assuming that these savings are passed onto the consumer, the cost of motor insurance should decline.

Against the wider development to reduce the cost of motor insurance premiums a recent case decided by the European Court of Justice, Association Belge des Consommateurs Test-Achats ASBL and others (Case C-236/09), is anticipated to result in increased premiums for certain motorists. The judgment has outlawed gender based insurance pricing from 21 December 2012 which the insurance industry has said will require a rise in premiums for women motorists who have previously benefited from lower cost policies as a result of being deemed a lesser risk on the road. This change, coupled with proposals to ban postcode discrimination (as outlined above in the Motor Insurance Regulation Bill), may reduce the means by which insurers can price motor insurance according to established risk factors.

With motor insurance under greater scrutiny and providers' pricing methods being challenged, the next few years will require the industry to pay close attention to regulatory and legislative developments and ensure that changed pricing will not undermine ongoing profitability.