UK regulator the Financial Conduct Authority has issued a statement to say that the guidelines for the use of cloud services providers by insurers and reinsurers will not be implemented.
In February EIOPA issued its final guidelines on how insurers should work with cloud services suppliers to avoid a range of risks.
At the time it said the aim of the Guidelines was to:
(a) provide clarification and transparency to market participants avoiding potential regulatory arbitrages;
(b) foster supervisory convergence regarding the expectations and processes applicable in relation to cloud outsourcing.
However, The FCA issued a statement to say that as the UK will no longer be in the European Union by the time the guidelines come into force, they will not be implemented for underwriters in Britain.
“The FCA has notified EIOPA that the Guidelines are not applicable to regulated activities within the UK’s jurisdiction, as they will enter into force on 1 January 2021, after the EU withdrawal transition period is expected to end,” it said. “We will continue to apply the FCA FG16/5 Guidance for firms outsourcing to the cloud and other third-party IT services in the UK, first published in 2016 and last updated in September 2019. We will keep this guidance under review and, where appropriate, consult to update this to ensure it remains consistent with relevant international standards.”
The news is the first tangible sign of the move by the UK away from the EU’s rules and regulations around the financial services sector and comes weeks after UK Chancellor Rishi Sunak announced that the UK would be looking at the creation of its own solvency rules for the re/insurance market post Brexit.