Bank of England plans to let insurers make riskier investments as regulations eased
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Central bank has been rowing back on rules introduced after financial crisis, saying some appear to have been ‘overcooked’. The Bank of England plans to slash the “reporting burden” on UK banks and allow insurers to make riskier investments without initial approval, as it comes under government pressure to ease regulations introduced after the financial crisis.
Sam Woods, a deputy governor at the Bank who leads its regulatory arm, the Prudential Regulation Authority (PRA), said the central bank has been rowing back on rules that appeared to be “overcooked”, suggesting they may have gone too far and harmed the financial sector.
However, Woods, who was speaking to members of the House of Lords financial services regulation committee, insisted he did not want to see a regulatory “race to the bottom”. Both the PRA and fellow City regulator the Financial Conduct Authority have come under renewed pressure to support UK growth by easing rules on the financial services sector. In November, the chancellor, Rachel Reeves, ordered the watchdogs to encourage more risk-taking across the industry.
The former Tory government introduced rules that would force the City watchdog to consider whether its regulations were promoting growth and competitiveness among companies, rather than simply protecting consumers. The drive has included removing the cap on banker bonuses and softening capital requirements as part of new so-called Basel 3.1 rules. But Woods said further reforms were afoot, including for banks, which have long complained about the level of compliance they face in the UK.
