Weekly Financial Services Regulatory Update - Week To 17 October 2014

17 October 2014: PRA speech considers Solvency II models, bonus caps and governance for banks and insurers. The Bank of England (BoE) published a speech given by Andrew Bailey, Deputy Governor for Prudential Regulation and CEO of the Prudential Regulation Authority, at the City Banquet.

Issues considered by Mr Bailey in the speech included the following:

• Solvency II models. Mr Bailey noted that, as a consequence of the implementation of the Solvency II Directive (2009/138/EC), insurers will be using models to assess safety and soundness and policyholder protection. He emphasised that the PRA will be using these models in "an appropriately diagnostic fashion". The PRA will seek to challenge models robustly and will not hesitate to withhold approval of inadequate or opaque models