Mr. Gerry Cross:

On freedom of service and insurance companies, one of the issues that lay behind the suite of problems has been the ability of host authorities, for example, the Irish Central Bank in the case of Setanta, to engage effectively with the home authorities. This means where an insurance company is set up in another jurisdiction and provides services in Ireland. One of the challenges has been the fact that we as a prudential regulator have not had sight of that. and we have not had the prudential responsibilities or other authority. That has been a concern. The European Insurance and Occupational Pensions Authority has taken material steps to try to address that problem recently. For example, what was previously called the Siena Protocol is now called the General Protocol and has now become a decision of the European Insurance and Occupational Pensions Authority sets up a framework and a set of requirements for authorities to engage with each other to provide information that allows them to ask each other questions. As well as that, the European Insurance and Occupational Pensions Authority has developed so-called platforms of co-operation so that where an insurance company in one jurisdiction is doing business in another jurisdiction and issues arise with that, the European Insurance and Occupational Pensions Authority will host a platform through which authorities can engage with each other about what is or may be happening and how it may be resolved. Those are steps that have been taken within the current framework to address that issue.

Another route to go might be centralisation, which is the route proposed by the Commission. That is a way of saying that we are going to bring the problems away from the local to the centre. One then faces the question of how much of that one does. For example, in the context of proposals, it is proposed that the European Insurance and Occupational Pensions Authority would have the power to approve models of cross-border insurance companies but that is just one aspect of their business so does one end up with a situation where responsibilities are less clear?

At least we now have clarity on responsibilities and we can work around the convergence, co-operation and co-ordination. Progress has been made in that respect. The question remains as to whether the centralisation route provides the most effective way of addressing the issue.