Government consults on insurers and financial stability
by Gill Montia
The Government has launched a consultation on proposals aimed at ensuring that if parts of the financial system other than banks run into trouble, they can fail in a way that does not threaten financial stability, without requiring taxpayer support.
The consultation focuses on insurers, investment firms and financial holding companies, central counterparties and other financial market infrastructures, such as payments systems.
Ministers are interested in feedback from all stakeholders including the firms, their customers, owners and members, and trade bodies.
In the case of insurers, the Government wants failing firms to be able to exit the market without disorderly impact and achieve an appropriate degree of policyholder protection.
The Consultation document states: “At a minimum, this suggests reviewing the current insolvency framework to ensure it provides insolvency practitioners with the tools to manage a firm’s failure in a way that secures appropriate continuity of cover for policyholders.”
Mark Hoban, Financial Secretary to the Treasury, comments: “Banks are only part of the financial system, and today’s proposals consult on what policies will best deal with the risks associated with other financial institutions, and with financial market infrastructure – the various networks that connect market participants.”