The Treasury, Prudential Regulation Authority (PRA) and Financial Conduct Authority recently clarified their approach to EEA-headquartered financial services firms wishing to carry on business in the United Kingdom post-Brexit. More recent evidence to the House of Commons Treasury Committee sheds further light on the PRA's thinking. It also highlights the difficulty for the PRA of giving guidance to firms while so much uncertainty surrounds the United Kingdom's future relationship with the European Union.
A recent opinion published by the European Insurance and Occupational Pensions Authority warns that UK insurers are unlikely to be able to meet obligations to European Economic Area (EEA) policyholders post-Brexit unless they mitigate the anticipated loss of passporting rights that will come with leaving the single market. The opinion raises concerns for UK insurers which have policyholders in EEA states other than the United Kingdom.
The Court of Appeal recently ordered two companies in liquidation to provide security to the defendants despite an after-the-event (ATE) policy. The decision confirms that the court can take account of a claimant's ATE insurance policy when considering whether to make an order for security for costs. However, the court stressed that the outcome of any security for costs application involving an ATE policy will depend on the terms of the particular policy.
In a recent case, the Commercial Court found in favour of the defendant insurer in regard to the disputed construction of an insolvency exclusion in a professional indemnity insurance policy. The case is a useful restatement of the law on the interpretation of exclusion clauses in insurance contracts. It also serves as a reminder that policyholders should not assume, simply because an exclusion is widely drafted, that it will not be upheld by the courts in the event of a dispute.
Recent comments made by the chief executive officer of the Prudential Regulation Authority (PRA) about its approach to supervision are worrying. An undelivered speech argues, among other things, that it is not enough for firms to meet the requirements of the regulatory regime, they must also comply with the spirit of the rules. Further, it states that the PRA will form its own judgement about what this means for firms, despite UK obligations under EU law.