Welcome to Insurance Briefing - a fortnightly round-up of insurance legal and business developments wih analysis and commentary from the insurance team at Pinsent Masons.

The topics we're focusing on this week include:

PRA guidance has implications for sub-outsourcing

Financial institutions must consider the extent to which their outsourcing contracts enable them to monitor sub-outsourced services in light of draft guidance prepared by the UK's Prudential Regulation Authority (PRA) says FinTech expert Yvonne Dunn of Pinsent Masons, the law firm behind Out-Law. The UK regulator has opened a consultation on proposed new guidance on outsourcing, which is open until 3 April 2020. The guidance is relevant to banks, insurers and investment firms, among others. It addresses a wide-range of issues and has implications for firms' oversight of sub-outsourcing arrangements. Financial institutions operating cross-border should consider the PRA's draft guidelines alongside the approach taken in other jurisdictions, with sub-outsourcing a topic that financial regulators in both Germany and Ireland have addressed.  Read more here...

Sir Jon Cunliffe: globalisation will challenge financial regulators

Financial regulators in the UK and EU will have to work together to address financial stability risks arising from cross-border financial activity and the growth of financial technology, a deputy governor of the Bank of England has warned. Sir Jon Cunliffe, who is the bank's deputy governor for financial stability, said that the UK and EU would need to work closely together to address future challenges, such as changes to cross-border payment systems, the growth of artificial intelligence and the impact of climate change. Cunliffe spoke about the challenges around what he called the "governance of financial globalisation" at an industry conference in Berlin earlier this month. Financial regulation expert Josie Day of Pinsent Masons, the law firm behind Out-Law, said: "Leaving the EU means the UK no longer has the role it had as an EU member state in shaping the direction and detail of the EU's financial services framework. To influence the approach to the risks and challenges of financial globalisation, the UK will need to use different governance channels." Read more here...

FRC announces review into corporate response to climate change

The UK's Financial Reporting Council (FRC) has announced a major review into how companies and their auditors assess and report on the impact of climate change, examining whether they are ensuring that reporting requirements were being met. The FRC said it would consider how the quality of information around climate change could be improved to support informed decision-making by investors and other stakeholders.  Corporate governance expert Tom Proverbs-Garbett of Pinsent Masons, the law firm behind Out-Law, said the review highlighted the FRC's continued focus on environmental issues.  "Following its emphasis on climate change in the 2020 Stewardship Code, the FRC is doubling down on the importance of environmental matters for companies in their reporting - and the contribution of auditors to its inclusion."  Read more here...

UK pension transfer advisers struggling to obtain PI cover

Problems obtaining professional indemnity (PI) insurance could lead to UK financial advisers dropping out of the pension transfer advice market, a trade body has warned.  Advisers have reported massive increases in premiums and restrictions on cover, as well as more questions from insurers at the application stage and "massive delays" in receiving quotes, according to the Personal Finance Society (PFS). The trade body said that "soaring premiums and restrictions to cover" meant that an adviser could be forced into bankruptcy by a single compensation claim, meaning many were making the decision to exit the market.  Pensions expert Robert Tellwright of Pinsent Masons, the law firm behind Out-Law, said: "A decision to transfer benefits out of a final salary scheme is a huge decision for the individual concerned, and it is vitally important that they are able to get high quality financial advice about that decision.  The FCA needs to urgently engage with independent financial advisers (IFAs) in this market, to ensure that standards of advice are improved where deficiencies have been identified. Until this is achieved, there will continue to be upwards pressure on the insurance premiums the IFAs have to pay." Read more here...

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