European Insurance and Occupational Pensions Authority
Insurance stress testing - EIOPA publishes second Discussion Paper on methodological principles - June 2020
The European Insurance and Occupational Pensions Authority (EIOPA) has published a second Discussion Paper setting out methodological principles and guidance for the conduct and assessment of future EU-wide insurance stress test exercises. EIOPA published its first Discussion Paper on the topic in July 2019.
The paper seeks stakeholders’ views on how to further enrich the stress test toolbox and covers the following topics: (i) stress test framework on climate change; (ii) approach to liquidity stress testing; and (iii) framework for bottom-up insurance stress testing.
The deadline for comments is 2 October 2020.
EIOPA Discussion Paper on methodological principles of insurance stress testing
Webpage
Press release
Financial Conduct Authority
FCA Consultation Paper CP20/9: Driving value for money in pensions - June 2020
The FCA has published a Consultation Paper (CP20/9) setting out its proposals to make it easier for Independent Governance Committees (IGCs) and Governance Advisory Arrangements (GAAs) to compare the value for money of pension products and services, enabling them to be more effective in assessing value for pension scheme members. IGCs currently oversee the value for money assessments of workplace personal pensions provided by firms, such as life insurers and some self-invested personal pension (SIPP) operators and provide independent oversight of workplace personal pensions in accumulation.
This follows the publication by the FCA of its Thematic Review (TR20/1) on the effectiveness of IGCs and GAAs, which found that while a number of IGCs are working well to provide value for money for their members, a lack of consistency in the way IGCs and GAAs operate means that members of some workplace pension schemes may not be receiving value for money. Among other things, the review found that: (i) some IGCs lack the necessary independence and were ineffective at challenging firms to ensure value for money for workplace pension scheme members; (ii) those IGCs which maintained independence from the firms whose pension schemes they had responsibility for delivered better outcomes for pension scheme members; and (iii) GAAs operated by third-party firms on behalf of pension providers were less effective at delivering meaningful improvements in value for money.
The Consultation Paper includes proposals to introduce a simple framework for annual IGC and GAA value for money assessments, including a definition of ‘value for money’ and three key elements of value (charges and costs, investment performance and quality of service) for IGCs to consider when conducting their assessments.
The consultation period closes on 24 September 2020. The FCA intends to publish a Policy Statement outlining its final rules in Q4 2020.
FCA Consultation Paper CP20/9: Driving value for money in pensions
Webpage
FCA Thematic Review TR20/1: The effectiveness of IGCs and GAAs
Webpage
Press release
COVID-19 - FCA publishes update on its High Court BI insurance test case - 24 June 2020
The FCA has updated its webpage on the progress of its High Court test case, which seeks a declaratory judgment about the meaning and effect of the wording of certain business interruption (BI) insurance policies with a view to resolving contractual uncertainties about the validity of BI insurance claims in the wake of COVID-19.
The FCA has updated the webpage to:
- publish the court order made following the case management conference on 16 June 2020, which confirms that the case is scheduled to start on 20 July 2020;
- publish the individual defences of each defendant insurance firm party to the case; and
- invite policyholders, their insurance intermediaries, other stakeholders and their legal advisers to provide comments on the defences by 29 June 2020. The FCA will consider these comments when drafting its reply and skeleton arguments, which are due to be submitted on 3 July 2020.
FCA webpage on its High Court test case on the validity of BI insurance claims in light of COVID-19
Please see the Brexit section for an item on the written ministerial statement outlining the UK’s approach to the implementation of a range of financial regulatory reforms before the end of the Brexit transition period, including in relation to Solvency II, CSDR, SFTR, EMIR Refit, BMR, MAR, PRIIPs and BRRD II.
