(Reuters) - The Bank of England’s governor warned insurers that he will hold their top executives accountable in the same way that he has cracked down on Britain’s errant bankers, The Times reported early Thursday.
In a comment piece written for The Times, 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.
Carney 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,” Carney said.
The Times reported that Carney did not detail what sanctions insurance executives could face.
Carney warned that although insurers escaped largely unscathed from the meltdown in global credit markets seven years ago, they are not without their risks.
The governor said that the Bank would be “vigilant” about the flood of new capital going into higher-risk investment vehicles, as insurers search for higher returns amid record low interest rates.
He added that the Bank is also working with its counterpart in Europe to help to make it easier for insurers to become greater providers of funding to small, medium and large businesses and help to pay for long-term infrastructure projects.
Despite stringent rules governing the amount of capital they should hold, there is always the danger that an insurer will fail, Carney said.
Britain’s financial watchdog Financial Conduct Authority said in March that it investigated whether people locked into some 30 million pension and other savings plans sold by insurance firms in the 30 years after 1970 are treated fairly compared with new clients.
Shares in insurers including Aviva, Legal & General, Prudential, Resolution and Standard Life were hit on speculation the FCA probe could lead to changes that affect the profitability of the products.
Reporting by Aashika Jain in Bangalore; Editing by Lisa Shumaker