Friday, 10 January 2014

"Comply or Explain" responses to EIOPA's preparatory guidance - UK oddities?

Isle of Man - "Call that a flood"
Happy New Year (or Blein Vie Noa as we say on the relatively unflooded Isle of Man). I hope you all took the opportunity to fall ill and get fat like I did, so we can recommence battle in 2014 with overflowing sinuses and bursting belt buckles...

I managed to take a look at some of the responses that EIOPA have received regarding whether or not the 32 National Competent Authorities (NCA) currently invested in the Solvency II game are planning to follow EIOPA's Preparatory Guidance over the next 2 years. Please serve yourselves from this central location.

It became evident over December that there was likely to be some non-compliance (both the French and British put their heads above the parapet), though as this was a "comply or explain" exercise, this was not necessarily grave - we are after all in the business of 'preparing' at this juncture - but I was curious to see precisely how different countries "explained" themselves.

In response to each guideline within the 4 EIOPA documents, the options for each NCA were to respond;
  1. Yes - we already comply
  2. Yes - we intend to comply
  3. No - we do not and will not comply
  4. Not applicable (though I'm not certain why this is an option)
They were also given space to provide text/links to prove how they are compliant with each guideline, and som space to provide explanations (questionnaire template here).

I was therefore surprised to see the British approach (which was generally "yes") also involved;
  • Not providing an explanation when they have said "No" to a guideline (which admittedly is only in one case!)
  • Unnecessarily using a copy/paste piece of text as an explanation for a number of guidelines where they have said they "Intend to comply"
  • Unexpectedly answering "Not Applicable" to no fewer than 10 articles within the System of Governance guidance, some of which definitely featured in the feedback on the PRA's recent Supervisory Statement as bones of contention (the actuarial function's responsibilities for example).
Obviously no surprises that the French will not be attempting to comply anything in the System of Governance world after their earlier warning, though their rationale is expanded upon in this article. That the strict definition of "AMSB" is an issue for the French industry is surely old news at this juncture, and it is ludicrous that such a matter has yet to be dealt with by the Commission's draftsmen. It certainly hasn't posed an issue for Germany (who intend to comply with all of Sys Gov), who operate dual boards.

While more may emerge over the next few weeks on what has been submitted here across the countries, I am more immediately interested in why the UK have elected to respond "not applicable" to so many System of Governance guidelines. It seems to fly in the face of their Supervisory Statement, and I can't imagine EIOPA are satisfied with that response. 


  1. The UK System of Governance entry has been repaired - no guidelines are considered Not Applicable but one is now showing as 'No' (consistent with SS4/13). The national competent authority responsible for the return has also been updated from the FCA to the PRA.

    No announcement was made about the changes so it may be worth checking other responses have not been amended, now and in the future...

    1. I spotted your tweet last night, what a sneaky bunch eh? I may enquire directly to find out what the crack was, seems horrifically careless at best.

    2. Is it just me or does their reply now contain only "Yes" and "Intend to Comply"?

    3. That's right Stupac, they evidently sent a refreshed version of their responses to EIOPA following their intial submission (which I blogged on the same day as it was published). John's comment above covers it nicely.

      They did not think it necessary to comment publicly on the matter (which was important, at least in my eyes), hence I posted separately shortly after on their apparent bashfulness over the last couple of months! Regards, Al