2022 0221 - House of Commons - Treasury Committee - Future of Financial Services
- 2022 0221 - House of Commons - Treasury Committee - Future of Financial Services
- committees.parliament.uk/event/7079/formal-meeting-oral-evidence-session/
- VIDEO-parliamentlive.tv
- Transcript - 34p
- Q537
- Chair: What is the risk?
- Vicky Saporta: The risk is that this goes too far.
- Chair: In what way?
- Vicky Saporta: In not giving sufficient protection to policyholders by lowering capital resources beyond the risk appetite that is consistent with policyholder protection.
- Q538
- Chair: Do you have another example of an area where there is a risk of going too far, which you are thinking about?
- Vicky Saporta: We are currently implementing in the UK—for the first time on our own—the latest set of the Basel reforms, the global financial crisis reforms, which in the jargon are called Basel 3.1.
- There could be pressure not to do the best thing for maintaining strong standards, and international standard setting is really important to maintain regulatory credibility.
- Q590
- Rushanara Ali: My questions are around capital and proportionality, primarily.
- We have heard from insurers that the risk margin is too high and too volatile, and that a wider pool of assets should be eligible for the matching adjustment.
- Vicky Saporta, do you think that the current level of capitalisation for insurance companies is too high? Should we expect capital requirements and the risk margin to fall in the process of the Solvency II review?
- Vicky Saporta: I will be brief because I am conscious of the time.
- We do think that the risk margin is too high and too volatile, and we anticipate that the reforms will lead to a reduction for life insurers—particularly those that offer long-term products.