§ Mr. LoveTo ask the Chancellor of the Exchequer (1) what research has been commissioned on the impact of recent developments in the life assurance and pension industry on the capital structure of organisations offering such services; and if he will make a statement; [148759]
(2) what estimate he has made of the impact of changes in the reporting of the financial position of insurance companies on those that have a mutual structure; and if he will make a statement. [148855]
§ Ruth KellyThe Financial Services Authority has developed a 'twin peaks' approach to the requirements for capital to support with-profits liabilities. This compares the capital required on a prudent regulatory basis with that needed on a realistic basis to meet payments made to policyholders, including terminal bonuses. The regulator will consider the impact on individual firms, including those that have a mutual structure, and on the industry as part of further development of its reserving proposals.
§ Mr. LoveTo ask the Chancellor of the Exchequer what estimate he has made of the impact that the Basel II accords on capital adequacy will have on mutual financial organisations; and if he will make a statement. [148760]
§ Ruth KellyThe new Basel Accord will be an international agreement on prudential capital, applying mainly to internationally active banks. Implementation of the new Basel Accord in Europe will be through a new Capital Adequacy Directive, which is expected to have a broader scope covering credit institutions and investment firms (as was the case for the implementation of the existing Basel Accord). That broader scope will encompass some mutual organisations, for example building societies, although the detailed boundaries are yet to be determined. The Treasury will assess the European Commissions formal proposals in the usual way once they are issued.
§ Mr. LoveTo ask the Chancellor of the Exchequer what impact he estimates recent changes in the regulatory regime for insurance companies will have on(a) projections of future returns of policy holders and (b) the anticipated benefits of their mutual structure; and if he will make a statement. [148871]
§ Ruth KellyThe rules governing projections for policyholders are set out in the Financial Services Authority Handbook under Conduct of Business. It is for individual companies to ensure that their projections are fair and not misleading. Recent changes to introduce 1025W a new realistic reporting regime are intended to provide the regulator with a better picture of the underlying financial strength of the industry, including mutuals.