Equitable Life Assurance Society

(asked on 25th November 2021) - View Source

Question to the Department for Business, Energy and Industrial Strategy:

To ask Her Majesty's Government, further to the Written Answer by Lord Callanan  on 22 November (HL3771), what assessment they have made of the critiques by the Penrose Inquiry into Equitable Life summarised in points (a) – (e) of Appendix IV paragraph 1.6 of FRS 27 of December 2004; and for each point, how they have addressed it with the IFRS Foundation; and if any points have not been addressed, why not.


Answered by
Lord Callanan Portrait
Lord Callanan
Parliamentary Under Secretary of State (Department for Energy Security and Net Zero)
This question was answered on 7th December 2021

FRS 27 has addressed many of the critiques made by the Penrose Inquiry in the development of IFRS 17, except for the differences between the accounting bases for regulatory and financial reporting. Insurance is inherently a complex business so some complexity in the related financial reporting is inevitable. However, a standardised basis for financial reporting will go a long way to addressing concerns related to complexity.

The Penrose Inquiry also identified regulatory failures to restrain the hazardous conduct of firms and to protect stakeholders. The Financial Services Authority (now the Financial Conduct Authority) took the recommendations from the report to enhance the solvency and liquidity requirements and set other boundaries more tightly in the Solvency II legislation.

The accounting basis for regulatory purposes is not within the remit of the IFRS Foundation and regulatory reporting is not designed to report performance. The Prudential Regulatory Authority has responsibility for promoting the safety and soundness of insurers and the protection of policy holders.

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