Friday, 28 August 2015

UK Senior Insurance Managers Regime - just be natural...

The PRA’s Supervisory Statement on Strengthening Individual Accountability in Insurance (SS35/15) has been released, not that far apart from their demolition job on Co-op Bank’s system of governance, which demonstrated something of an absence of such accountability across all three lines of defence, quite a feat!

While the Banking industry have been catered for on this topic with a few more bells and whistles, most noticeably by including an element of criminal liability  for their senior management (thanks Fred!), the approach for insurers and banks is supposed to be largely consistent.
The doc itself rather awkwardly references multiple sections of the incoming PRA Rulebook which, as yet at least, doesn’t exist as a conventional reference site, though it is due for release in “the summer” (the PRA subsequently released the new site 3 days after I published this post - that'll teach me!). It still pays to fish through the appendices of old Consultation Papers to get the materials cross referenced in this Supervisory Statement (here for most of them, from p44)
SIMF Interviews - "Next"...
I did cover this topic when the consultation paper first hit the table, and for those of a nervous disposition, the PRA have since produced a nice one-pager summarising what you need to know in the context of Approved Persons, Solvency II etc here (and done so much better than me, I hasten to add!). In addition, the transitional map from CF-XX to SIMF-YY is already available here.

I had a look through (largely ignoring the Group and Third Country specifics) to see if there was anything new and exciting since the consultation, and naturally there isn't! That said, the industry feedback received is detailed here (section 2), while I noted a few things below for my own benefit;
  • PRA not concerned about individuals located overseas, unless they are involved in strategic implementation, as opposed to strategy formulation (2.11).
  • Alerting to potential PRA blocking of SIMF applications where someone wishes to wear more than one hat, citing the obvious CEO & Chair example (2.15)
  • Persons allowed to do the same function in more than one firm - targeted perhaps at the floating actuary contignent who do the CF12 job for a few firms?
  • Awkwardly try to accommodate SIMF job-sharing, but lean towards discouraging it in the text (2.17-2.19)
  • List a few examples of what firms might consider to be "Key Functions" over and above those named in the Solvency II legislation, being particularly keen on Investments (2.25 and 2.27)
  • On the list of 11 Prescribed Responsibilities, they do their best to keep the NED world out of assuming any of them (2.40)!
  • Some attempt to informally restrict Chairpersons from filling their time with multiple other roles and responsibilities (2.44)
  • A timely reference, given the Co-op Bank Final Notice, to ensuring that Boards understand the Threshold Conditions (p12-13) and Fundamental Rules.
The Individual Conduct Standards (from p16) all seem fair at face value, with a bit of devil in the details, such as;
  • Key function holders being told (3.19) to not only meet the letter of the prevailing regulatory system, but also not to engage in "...creative compliance or regulatory arbitrage" - spoilsports!
  • Expectations that Key Function holders "take reasonable steps" to ensure that the business has sufficient systems of control, even if they delegate some, or indeed most, of the associated tasks themselves (3.20-3.22).
  • That should you breach any of the Conduct Standards, it materially affects your fitness and/or propriety, and therefore the PRA expect to be notified
Finally, to clear up that age-old debate, the PRA clarified in 2.4 that it "...does not expect persons other than natural persons to be approved for a SIMF". Anyone with career ambitions had better lay off the Botox and Bronzing then...


  1. Nice summary, as ever, Allan.

    Alas, the PRA launched their Rulebook website almost as soon as you posted it, meaning that all but the most basic links to the FSA Handbook website no longer work. The homepage link, however, does at least redirect to

  2. I am the Temptress of Fate! Gave the post a tweak accordingly, cheers

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