Consultation launched on FCA oversight of UK ILS rules

The UK’s Financial Conduct Authority (FCA) has launched a consultation on changes to the FCA Handbook to incorporate its supervisory oversight of the UK’s new insurance-linked securities (ILS) regulatory regime.

The consultation has been launched today, and sets out the FCA’s proposals for the ILS related changes required to its handbook, providing supervisory guidance for those undertaking or involved in ILS transactions under the new regulations.

This would add a new regulated activity for insurance risk transformation to the handbook and also changes related to the application process for ILS vehicles, proposals for fees for registration of protected cell companies (PCC), and a number of “consequential” changes the FCA doesn’t detail.

The FCA also said that there are “some additional rules we propose to create for ILS business,” within this consultation, making it important that ILS players familiarise themselves with rules that may not have been detailed in the original Treasury consultation period.

The FCA said that the rules will be of interest to those transacting in or servicing ILS and also to qualified investors who may seek to invest in London or UK based ILS vehicles.

There are some nuanced rules included in the consultation document, which make a difference to the way the regulator will oversee a UK ILS market, compared to some other domiciles. However there is also evidence of feedback having been taken into consideration from the original Treasury consultation as well, which is positive.

The full consultation document can be downloaded here. We encourage those considering using London as an ILS hub to read and provide feedback.