Philip Booth writes for Conservative Home
It is commonly thought that we have seen a huge liberalisation in financial regulation in recent years and that this was responsible for the financial crash. Across most sectors, this really is not true – certainly in the UK. Until we entered the EU, there was virtually no specific regulation of insurance companies. There was, however, in the case of life insurance, an excellent but simple law that facilitated the orderly winding up of insurance companies and which required disclosure. We have now moved to very prescriptive regulation of both the sales of financial products and of insurance companies themselves. This regulation is about to get tighter through the introduction of Solvency II in the EU. The UK often blames the EU for over-regulating our businesses, yet this dreadful piece of regulation is British born and bred. In its present form, the academics who signed the statement argue that Solvency II will damage insurance companies and may well lead to financial contagion and sow the seeds of future crises. The reason for this is that it will strongly encourage all insurance companies across Europe to invest in similar assets and strongly encourage investment in government bonds – hardly a safe haven.
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