So What has Brexit Done for You?

Looking back there have been a number of major European Directives applied to the UK insurance industry in the last 10 years, all of which have cost the industry billions of pounds over that time. The most notable, and costly, have been the Solvency II Directive, The Insurance Distribution Directive, The Markets in Financial Instrument Directives, and the Packaged Retail & Insurance Based Investment Products Directive.

It is only now, 4 years after Brexit day on 31^st January 2020,  that we are beginning to see minor changes and that seems bound to leave the many who hoped for extensive streamlining, leading to efficiency gains, and then greater competitiveness, disappointed.    

Nothing much seemed to be happening until Chancellor of the Exchequer, Jeremy Hunt, made his “Edinburgh Reforms” announcement on 9^th December 2022.  Was this triggered by a burning desire to bring into being a more competitive UK financial services sector, or a dawning realisation that a general election was less than two years away and nothing much seems to have happened to  “take back control”?

The purpose of his Edinburgh Reforms was said to be –

“A new chapter for financial services sets out the government’s vision for an open, green and technologically advanced financial services sector that is globally competitive and acts in the interests of communities and citizens, creating jobs, supporting businesses, and powering growth across all of the UK”.

To get the ball rolling Chancellor Hunt issued instructions to the Financial Conduct Authority and the Prudential Regulation Authority to have regard to the following new secondary objectives when trying to achieve their primary statutory objectives –

1. Supporting the government’s objective of medium to long-term economic growth in the interests of consumers and businesses;

2. Supporting the government’s objective to promote the international competitiveness of the UK.

So what has happened since December 2022? Again probably not as much as the industry would have liked! 

There are minor changes to the Solvency II requirements, such as the removal of the Regular Supervisory Report. The Key Information Document, as set out in the PRIIPS Regulations, has been changed. A review is underway of the “Advice Boundary”, but the published consultation has not been met with a huge cheer. There may be some changes to “disclosure requirements”, but nothing major.

So the inevitable conclusion is that “taking back control” amounts to very little and is probably a “Yes Minister” triumph for the “Sir Humphreys” rather than a far reaching re-positioning of the financial services sector in terms of both domestic economic growth and international competitiveness.

I will see if I can rewrite this article in two years’ time with a more positive outcome, but don’t hold your breath!

For more regulatory news and guidance please review our other articles, including an update on the Advice Boundary Review.