25/11/2015
One struggles with the problem these days over where to direct one's wrath: at the malign ignorance of what passes for journalism these days, or the leaden stupidity of the eurosceptic "industry" which is so keen to pick up any passing meme and adopt it as its own.
All that has to happen is from some idle hack to write a vaguely critical piece on the EU and, within nanoseconds, it is being tweeted enthusiastically in support of the anti-EU agenda â thereby perpetrating the original ignorance.
Into this category plops a piece by Ben Wright in the
Telegraph who, in looking at the current progress of the "Solvency II" financial regulation package through the system, makes the unwarranted assertion that, "The single European market is looking increasingly like a sham", with the rider that, once again "the problem is regulation".
It is not so much that this assertion is wrong though, as completely irrelevant â a
non-sequitur which frames the story in the wrong context and misleads readers.
What we are supposedly being informed about is "Solvency II", a complex set of "prudential" rules applying to insurance companies doing business in European Union member states. It is in that context that Ben Wright asserts that one of the main arguments in favour of the UK's continued membership of the European Union is that it will ensure British companies retain their access to the single market.
The sector that is thought to most benefit from such access is finance, he tells us, and then lays out his pitch. "It may come as a bit of a shock to Britain's Europhiles that leading senior executives of UK insurance companies are privately protesting that the single market in which they supposedly operate is a sham", he says.
The problem, he says, "unsurprisingly enough", is regulation. Specifically, it is the Solvency II package with new standards on accounting, capital, governance and the like. It was designed, Wright adds, to make the insurance companies safer, and level the playing field across the continent. It may achieve the first aim, he then claims, but "it appears to be falling some way short of the second".
The point here, though, is that the package wasn't designed primarily (or at all) as a single market measure, and therefore it was never structured or intended to "level the playing field" within the EU/EEA market area.
Specifically, the "Solvency II" package on capital requirements, based on
Directive 2009/138/EC, implements recommendations from the International Association of Insurance Supervisors, the International Accounting Standards Board (IASB), the International Actuarial Association and nine other agencies alongside the World Bank and the IMF.
As we point out in
Flexcit, this is truly an international instrument, with the standards developed by global bodies and implemented globally. At a European level, the key player is the EU's Frankfurt-based European Insurance and Occupational Pension Authority (EIOPA), which works alongside Member State regulatory bodies.
At international level, alongside the IASB is the
International Financial Reporting Standards (IFRS) Foundation and, as
this document points out, they are treating Solvency II very much as unfinished business. There is much more to come.
Thus, while Ben Wright can regale us with tales of woe about legislation that comes into force on 1 January 2016 â as indeed he does â it is irrational to blame the problems on the "single European market" and doubly so without making reference to the international origins.
As PWC helpfully
point out, this is part of the global response to the global financial crisis and we are now moving into the era of
global regulation. And into this mix, a new player, the Financial Stability Board â as the executive arm of the G20 â is taking an increasing role.
From the viewpoint of the "leave" campaign, this is highly significant. As long as we are in the EU, our representation at the global top tables is being weakened. Another crucial effect is that the process of adopting international standards is being needlessly complicated by having the EU in the middle, translating them into EU instruments which are not attuned to the specific requirements of the UK industry.
Therefore, problems with Solvency II should not be treated as just (or at all) another opportunity for a whinge about EU legislation. Far more importantly, they point up the effects of globalisation and the increasing difficulty of trying to shoehorn global standards into the EU mould, while keeping them relevant to the UK market.
And there we're missing the trick. Instead of pointing out the advantages of leaving â in being able to manage the process of globalisation more efficiently by cutting out the middle man - we're still grubbing about in the weeds, bitching about EU law, in that tedious, on-going fest of negativity.
This, in fact, was precisely what Leave.eu's own "experts" have said we shouldn't do, and what we've been warning about for years. But the leave campaign seems incapable of dragging itself out of the weeds. Locked into "whinge mode", it is failing to capitalise on some of the strongest arguments we have in favour of leaving.
