Insurance must have place at financial stability top table

Insurance should have a place on the board of the new committee being set up to spot risks to the UK’s financial stability, a joint committee of MPs and peers has recommended.

The membership of the Financial Policy Committee “must be broadened to include experts from across financial services, including insurance, and the wider economy”, according to the joint committee of the Houses of Lords and Commons’ report on the draft Financial Services Bill, which was published today.

Under the government’s plans for a reform of financial regulation, outlined in the draft bill, the FPC will become a macro-prudential supervisor with a wide-ranging remit to identify risks to the stability of the financial system arising from excessive gearing, asset bubbles or the ‘interconnectedness’ of firms.

The report by the committee, which was chaired by former Tory minister Peter Lilley, also recommends that the FPC should become a committee of the Bank of England with equal status to the Monetary Policy Committee, which sets interest rates.