Bank of England accused of ‘dragging its feet’ on cutting EU red tape

A Brexit row has erupted after the Bank of England was accused of “dragging its feet” over cutting European Union red tape, as well as “holding back investment and reducing the UK’s competitiveness”. Britain officially left the EU on January 1, 2021 when the agreed transition period ended and a post-Brexit trade deal between the two sides came into force. The Bank’s Prudential Regulation Authority (PRA) has told insurers that key aspects of Solvency II reform will not be implemented until at least early 2025.Documents published last week state this is to ensure an orderly transition away from the current set of rules.Solvency II “sets out regulatory requirements for insurance firms and groups, covering financial resources, governance and accountability, risk assessment and management, supervision, reporting and public disclosure”.But senior Tory MPs – including former Business Secretary Jacob Rees-Mogg – have lashed out over the prolonged timeline from the PRA and have accused regulators of not acting quickly enough in axing swathes of EU-era regulation.Mr Rees-Mogg said: “The PRA is a consistent obstacle to reform and continues to drag its feet. It is holding back investment and reducing the UK’s competitiveness.” Brexit news: The Bank of England, led by Governor Andrew Bailey, has come under fire (Image: GETTY) Brexit news: Jacob Rees-Mogg said the PRA is a ‘consistent obstacle to reform’ (Image: GETTY)Last week, the PRA launched its latest consultation on reducing the burden around reporting and administrative requirements for Solvency II.One of the four central pillars to the Government’s proposed reforms to the rulebook are changes to reporting requirements. The EU introduced the rulebook in 2016, requiring UK insurers to hold vast amounts of sums on their balance sheets.The consultation from the PRA on changes to these reporting requirements run until next May.But fury is beginning to erupt after the PRA said it will only consult on the other three sections of reforms – including capital requirements – ‘at a later date’, raising fears Solvency II will drag on to nearly a decade after the UK voted to leave the EU.READ MORE: Rishi Sunak says taxes must rise to avoid economic suffering Brexit news: The Bank of England has come in for heavy criticism (Image: GETTY)The insurance industry has long been touted as one that could be boosted from EU red tape being torn up, with industry bosses vowing to unleash a £90bn-plus investment ‘Big Bang’ if ministers take advantage of Brexit.Insurers and pension funds are becoming concerned they are currently being restricted from injecting as much capital as they want into illiquid assets like infrastructure.The PRA had previously insisted it was determined to ensure any easing of the regulatory burden does not create a risk to policyholders or to the stability of companies, but also warned against sweeping changes that could “decapitalise” the industry sector.Before the Tory leadership contest began in the summer, Rishi Sunak held talks with insurance bosses and insisted he wanted to deliver Solvency II reforms “at pace”.DON’T MISSBrexit ‘set a framework to allow Ukraine to be so successful’ [VIDEO]Sturgeon’s new economic plan for independent Scotland branded ‘absurd’ [INTERVIEW]Sunak strikes £62m deal a year with Macron to tackle migrant crisis [REPORT] Brexit news: Rishi Sunak met insurance bosses before the Tory leadership contest in the summer (Image: GETTY) Brexit news: The key moments that led to the UK’s departure from the EU (Image: EXPRESS)An industry source close to the BoE said the PRA has delivered its first phase of Solvency II reporting reform which has “significantly reduced reporting for small and medium firms”, according to the Sunday Telegraph.Consequently, businesses are likely to see the burden on reporting and administration reduced, with the proposed reforms also boosting their flexibility to invest in long-term assets and free up funds by reducing the risk margin insurers face.The UK Government has finished its own consultation on Solvency 2 and promised it will use the Financial Services and Markets Bill to reform the rulebook. This is currently going through Parliament but the draft legislation is also reportedly thin on detail around the changes ministers will make to the regime.A Bank of England spokesman said: ‘The timing of our proposed reforms to Solvency II reporting requirements is deliberately designed to coincide with the Government’s legislation. It would be costly and inefficient for firms to make two sets of changes in close succession.’