THE Bank of England’s Governor has warned insurers they are under scrutiny by supervisors and he will hold top executives accountable in the same way that he has cracked down on Britain’s bankers.
Mark Carney said “integrity, honesty and skill” in senior managers are not optional, whether they are in charge of insurers, investment banks or building societies.
He said the Bank of England wants senior managers of insurance companies to be held accountable if things go wrong and policyholders lose out.
“So alongside reforms that Parliament has asked us to make to hold senior bankers to account, we will create a similar regime for senior managers in the insurance industry,” he said.
Mr Carney did not detail what sanctions insurance executives could face though new laws mean bankers found guilty of “reckless misconduct” could face jail.
He also warned that although insurers escaped largely unscathed from the meltdown in global credit markets seven years ago, they too face risks.
The Government shook up financial regulation in 2013, launching a new watchdog operating from the Bank of England – the Prudential Regulation Authority – with a remit to scrutinise banks and insurers.
The Governor said the Bank would be “vigilant” about the flood of new capital going into higher-risk investment vehicles, as record low interest rates put pressure on insurers to improve their returns.