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As the Basel II process beds down it looks like it is the insurance world that is next. The replacement of Solvency I (as it is now known) by Solvency II has been set down for 2012 in the EU, with the expectation that it will be broadly followed elsewhere.
We can only hope for two things:
- They will come up with a better name for it (it lacks the ring that even a
fairly boringtown in Switzerland can bring it); and
- The US will not cock it up as badly as they have Basel II.
I know that, unlike Basel, there is no real global need to follow Solvency II, but given the globalized structure of the industry, something like this is inevitable.
I cannot claim to be too aware of insurance issues, so I will not try to pretend – but if you want to vent your own spleen or discuss the issue, go ahead.
ASIC (the Australian companies regulator) is commencing a review of the EFT Code of Conduct – the code that governs the way banks and other deposit takers interact with their customers when they are using electronic means to communicate with their customers. This includes such areas as internet banking and the use of credit and debit cards – but only where they are being used by consumers, not businesses. Bank / business interactions are currently effectively unregulated, but, in practice, for small businesses the banks follow the Code for the most part.
The scope of the review is, from the media release:
- liability issues arising from the growth and growing sophistication of Internet fraud;
- regulation of alternative payment facilities;
- coverage issues, including whether the protections of the Code should extend to small business as well as consumer account holders;
- obligations around mistaken payments;
- administrative arrangements associated with the EFT Code, including compliance monitoring and ASIC’s role as Code administrator; and
- other more specific issues raised by stakeholders in preliminary consultations.
The big one here is obviously the first. The issue here is who pays when a fraudster manages to clean out your account? At present, it is the bank that pays – and then passes the costs on to its customers and shareholders. In practice, what this means is that those of us who do not fall victim to internet fraud pay for those who do. Is this right and fair? Read the rest of this entry »
APRA today announced that the start date for their revised outsouring approach (discussed here) would be pushed back from 1 January 2007 to 1 April 2007. For details, see here (banks), here (general insurance) or here (life assurance).
Why is this? APRA do not seem to say, but my best guess is that the insurers are not ready and were not going to be in a position to state that their existing outsourcing arrangements were in “general compliance” with the new standards. For the banks, this is unlikely, given the paucity of the changes, but, as the application to the insurers is new, this was always going to be a big step.
If anyone would like to let me know otherwise, please do.