REGULATION Developing the regulatory landscape Charlotte Clark, Director of Regulation, shines a spotlight on the ABIs role in delivering for members through its work on new legislation and frameworks. Why has the ABI pushed for changes to Solvency II, and what has been proposed by HMG? Solvency II is the framework that sets out the regulatory requirements for insurance firms and groups, and covers a number of areas including financial resources, governance, disclosures and reporting. When the United Kingdom left the European Union, an opportunity arose to adapt the framework to make it fit for the UKs new needs through a review. The government has now published a package of reforms that will form the basis of the UKs new regulatory framework - to be named Solvency UK. In terms of the review, what is the ABI calling for? Following consistent lobbying, the governments objectives for the review aligned very closely with our own position, which was in brief to spur a vibrant insurance sector, to protect policyholders and ensure the soundness of firms, and to support insurance firms to provide long-term capital to support growth. Weve been arguing for a package of measures that would allow insurance companies greater flexibility to invest in a wider array of assets to support the green economy and the transition to net zero, boost local businesses in support of levelling up, all without undermining policyholder protection. On a technical level, weve been arguing for streamlined processes and changes to the eligibility criteria that would make some of these new investments more straightforward to invest in. Its currently easier to invest in a coal mine than a windfarm, and we need to remedy this situation. What are the next steps for Solvency UK? We strongly welcomed the governments plans for Solvency UK, which we believe are firmly in the interests of both current and future policyholders. More broadly, they will encourage a thriving and competitive industry which will ultimately benefit the UK economy, the environment and customers. Were all ready for these changes to be implemented, and look forward to seeing more shovels in the ground. The ABI have said the reforms we have made could unlock over 100 billion from UK insurers for productive investment. On that note, weve also listened to industrys proposals, and created the Long-Term Asset Fund to help unlock access to long-term illiquid assets. We believe thatll mean a significant boost to the productive capacity of the UK economy including much-needed infrastructure and decarbonisation products. Andrew Griffith MP, Economic Secretary to the Treasury Why is the Future Regulatory Framework (FRF) so important for the sector? In a nutshell, the government established a review of the FRF to consider how this key framework should be adapted to reflect, among other things, the new position of the UK outside the European Union. But its also about making sure there is the right level of fair and robust accountability and transparency of the regulators, especially when they are being given more responsibilities in a postBrexit framework. The big news this year was, of course, the publishing of the Financial Services and Markets Bill in July. This gives us a clear sense of HM Treasurys plans, and we were glad to see many of the recommendations we put forward during the consultation period included. Id say we are reasonably happy with the Bill as it stands, which is a great outcome at this stage, but wed like to see many of the new measures strengthened, so there is still more to do. Why has the ABI pushed for growth to be included? The ABI was one of few organisations that pushed for the regulators to be given a new statutory objective of supporting economic growth. While we believe that stability is the bedrock of everything we do as a sector, we think its essential to also promote growth, to protect the long-term health of firms and stimulate a vibrant economy. We have made good progress on this, with the introduction by government of a new clause in the Bill, which sets out a specific clause on the accountability and transparency of reporting by the regulators. How has the ABI worked to shape the Bill? Our team has worked closely with our members, building great relationships with the Treasury and the wider sector to get a broad view of requirements. The Bill is now approaching its final stages in the House of Commons, and, after that, it will go to the Lords where it is certain to receive further detailed scrutiny. Hopefully, by spring it will have become legislation, and then we can get on with implementing Solvency UK. While we believe that stability is the bedrock of everything we do as a sector, we think its essential to also promote growth, to protect the long-term health of firms and stimulate a vibrant economy What has the impact of the new FCA Consumer Duty been this year for firms? Fundamentally, the new Consumer Duty aims to create an environment in which businesses put customers first by requiring them to act to deliver good outcomes for retail customers. A key plank of this is a requirement to understand what customers are trying to achieve and then working to support them in that aim. Firms were obliged to provide their plans for implementing the Consumer Duty to the FCA by the end of October, with the whole initiative to be completed by July 2023 for open products and services. While this still looks fairly challenging, our industry is quite well placed compared with others because we already meet the FCAs rules on product oversight and governance, and we went through a kind of dry run with GI Pricing at the beginning of this year and there are considerable crossover issues. How has the ABI represented the industry on this topic? Our close relationship with the FCA really paid off in the sense that they listened to the concerns we raised about the original timescales being too tight and accordingly made them more generous. The FCA knows were not being awkward when we raise these issues, but, rather, we just want enough time to do it properly. This has been a hot topic among our members and weve set up an implementation group in which people can discuss the issues, sometimes with the regulator in the room. How does this and other work support customers? For the many customers who find financial services, such as loans and pensions, complex and impenetrable, greater clarity and support from firms will surely be welcome. As a society, we want to encourage greater financial literacy. To this end, we have also been working with Plain Numbers to present things in the clearest way possible. Many of our members see the logic in putting the customer outcomes first, because they know this will increase satisfaction and loyalty, which makes business sense.