Bank of England Aims to Loosen Rules for Lenders and Insurers

The Bank of England has reportedly announced plans to relax rules for banks and insurers.

Sam Woods, chief executive of the central bank’s Prudential Regulation Authority, told a House of Lords committee Wednesday (Jan. 8) that financial resilience and economic competitiveness “go hand in hand” as he discussed new efforts to address government demands to bolster economic growth.

The changes can happen without sparking “a race to the bottom” on financial regulation, added Woods, whose comments before the financial services regulation committee were reported by the Financial Times (FT).

According to the report, Woods said his agency would free insurers from having to get pre-emptive authorization of investments by allowing retrospective permission. In addition, the regular will outline plans to lower banks’ reporting requirements this year, having already reduced them by a third for insurers.

Woods said that the “matching adjustment investment accelerator” would speed up investments by insurers, which are sometimes put on hold while awaiting regulatory approval.

Solvency rules for insurers have already reduced reporting requirements for the sector by a third, Woods said. He added that he’s doubtful the PRA could provide the same scale of reduction for banks, but added “there must be some things we can do there,” telling the lawmakers that proposals would come later this year.

The FT report noted that U.S. president-elect Donald Trump has promised a more hands-off approach to regulating the financial sector, leading to concerns that other countries will relax many of the protections created in response to the 2008 financial crisis.

In fact, the second Trump administration could even lead to some U.S. financial regulators’ powers being scaled back, or to those agencies being eliminated altogether.

“In the meantime, however, the underlying issues are still there, and key among them will be examinations of the risks and rewards inherent in bank-FinTech partnerships, cybersecurity, capital requirements and innovation,” PYMNTS wrote late last month.

For example, the Synapse bankruptcy, and the shockwaves it sent as tens of thousands of customers could not access their money, will continue to have ripple effects this year.

“One trend that will last into the next several months will be how the partnerships are set up and how record-keeping may be redefined,” PYMNTS wrote. “A trio of federal bank regulatory agencies said in July that they are considering ‘additional steps’ to ensure banks effectively manage risks associated with bank-FinTech arrangements.”