§ 4.32 p.m.
§ Viscount Goschen rose to move, That the draft regulations laid before the House on 23rd November be approved [2nd Report from the Joint Committee].
§ The noble Viscount said: My Lords, I beg to move the first Motion standing in my name on the Order Paper and it may be for the convenience of the House if I speak also to the Insurance Accounts Directive (Miscellaneous Insurance Undertakings) Regulations 1993.
§ The regulations are for the purpose of implementing the EC Council directive on the accounts of insurance undertakings which was adopted in December 1991. They are primarily concerned with the presentation and content of the annual report and accounts of insurance companies to their shareholders or members. They also deal with consolidation of the accounts of insurance 1477 groups. They will apply to accounts prepared in respect of all financial years starting on or after 23rd December 1994 although companies may follow them earlier if they wish.
§ The first, and by far the larger, of the two sets of regulations is that made under the Companies Act 1985. It will apply to almost all British insurance companies. Its rules for the preparation of accounts will replace those currently set out in Schedule 9A to the Act.
§ The second set of regulations applies what is essentially the same set of rules to a very small number of insurance undertakings which are covered by the directive but which are not currently required to prepare accounts under the Companies Act.
§ Up to now, although insurance company accounts have had to be audited, it has not been necessary for the auditor to give an opinion on whether or not the full accounts are true and fair. Under these regulations, however, it will be compulsory for insurance company accounts to give a true and fair view of company assets, liabilities, financial position and profit or loss. It will no longer be possible to have hidden reserves, permitted under the current law.
§ The regulations require considerable disclosure of information. Standard formats for the balance sheet and profit and loss account are prescribed. There will be detailed rules concerning accounting treatments and the valuation of certain types of asset and liability and a specification of matters to be disclosed in the notes to the accounts. Almost all of this detail derives directly from the directive.
§ The Government have consulted extensively with the insurance industry and other interested parties over the last two years since the directive was adopted. I am pleased to pay tribute to the admirable assistance we have received from those quarters. Their views and comments have been invaluable in drafting these regulations.
§ We believe the new style of accounts prepared under the regulations will be welcomed by all users of accounts—shareholders, members, intermediaries, analysts and others. I therefore commend the regulations to the House.
§ Moved, That the draft regulations laid before the House on 23rd November be approved [2nd Report from the Joint Committee].—(Viscount Goschen.)
§ Lord Graham of EdmontonMy Lords, my noble friend Lord Peston apologises for his absence and has asked me to say that these measures have his full approval and that of these Benches.
§ On Question, Motion agreed to.