UK regulator right to retain flexibility to force changes on internal models
Head of the PRA plans to use early warning indicators in supervisory work, notwithstanding the risk of EU challenge
The UK's prudential regulator is sensible to maintain the flexibility to force companies to adjust their internal models and increase capital buffers in response to developing risks, even at the risk of a legal challenge in European courts, according to regulatory experts.
The comments come as it emerged that the Prudential Regulation Authority (PRA) is planning to use a system of 'early warning indicators' in its supervisory work on insurers' internal models, which may go beyond the Solvency II
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