Solvency II: "An object lesson in how not to make law"? | Practical Law

Solvency II: "An object lesson in how not to make law"? | Practical Law

Andrew Tyrie, MP (Chairman of the House of Commons Treasury Committee), recently described Solvency II as "an object lesson in how not to make law". In similar vein, Andrew Bailey, PRA Chief Executive, has said that Solvency II is "lost in detail" and "vastly expensive".

Solvency II: "An object lesson in how not to make law"?

Practical Law UK Articles 8-532-2567 (Approx. 7 pages)

Solvency II: "An object lesson in how not to make law"?

by Alison Matthews, Consultant, Herbert Smith Freehills LLP
Law stated as at 19 Jun 2013 • European Union, United Kingdom
Andrew Tyrie, MP (Chairman of the House of Commons Treasury Committee), recently described Solvency II as "an object lesson in how not to make law". In similar vein, Andrew Bailey, PRA Chief Executive, has said that Solvency II is "lost in detail" and "vastly expensive".
Draft guidelines issued by the European Insurance and Occupational Pensions Authority (EIOPA) in March 2013 aim to restore credibility to the Solvency II project. More recently, the European Commission has welcomed EIOPA's technical assessment of the proposed long-term guarantee package (which was delivered on 14 June 2013) and confirmed that Omnibus II trialogue discussions can now restart. In reality, only final agreement on the remaining issues and a properly planned timetable for bringing the Directive into full force will reassure firms that Solvency II is back on track.
This article examines:
  • Whether the guidelines introducing elements of the Solvency II Directive (2009/138/EC) represent legitimate preparation for the new regime or implementation by the back-door.
  • Firms' exposure to different levels of compliance by national regulators with the guidelines.
  • The implications for firms of recent PRA statements about where Solvency II negotiations are headed, including its 23 May 2013 update on the EU timetable and its approach to implementation.