I understand that some of your work depends on responses by us – I can assure you that we will be making our best endeavours to react quickly and make any remaining decisions or give necessary guidance as soon as we are able. As Governor Mark Carney noted in his speech in September, the PRA will not hesitate to withhold approval for inadequate or opaque models. The responsibility to meet the Solvency II Tests and Standards rests solely with firms and their senior management. Although the Bank will continue to work with firms as they finalise their models, be under no illusion that each model will be assessed comprehensively and objectively against the full Tests and Standards, and that those failing to meet the requirements will not be approved. We have to get this right and can’t allow weak models to go into live. 2  BIS central bankers’ speeches  IMAP firms must ensure that they have contingency plans in place so that they are still able to meet the 1/1/16 implementation date in the event that their model fails to be approved. For all firms, there are important deadlines to be aware of in relation to reporting and nonIMAP approval permissions, which will be discussed in the sessions later today. We are implementing new IT and data collection systems and will be ready to accept the submission data required under the directive from June 2015.
We believe this benefitted policyholders and left the industry in good shape to weather the recent financial storms of the Great Recession. Those are also desired outcomes that lie at the heart of the Solvency II Directive and so I want to leave you in no doubt that we will implement the Directive in a full and robust manner so as to continue to deliver the level of financial resilience consistent with the safety and soundness of firms and policy-holder protection. Another difference in the UK is that we are anticipating more internal model applications than any other EU country, which is not unexpected given the scale and diversity of the UK industry. This creates an unprecedented challenge for the industry, and for the Bank, in ensuring that models are of a high quality and that they meet the Solvency II requirements. It also creates some logistical challenges which you need to be aware of. If there are a lot of you trying to get approval, and only one of us, don’t expect that you can all present us with your models at the last minute and expect a one-to-one service. If too many firms leave their preparations too late, then we will have to prioritise – if you want to be sure, then get in as early as you can. Naturally, a significant proportion of our work relates to internal model approval, given the complex nature of many models and the detailed requirements of the Solvency II Tests and Standards.