By Liam Edwards

The UK parliament has published a letter, dated 14 October 2022, from the chairs of the House of Lords Economic Affairs Committee and Industry and Regulators Committee and addressed to Nikhil Rathi, Chief Executive of the FCA. The letter is available in full here.

The letter outlines that these two committees wrote to the Bank of England (“BoE”) and The Pensions Regulator (“TPR”), following the BoE’s £65bn bond-buying programme, to request an explanation on how BoE and TPR monitor the risk established by DB pension schemes using derivatives. Both the BoE and TPR, in response, noted that the FCA plays a central role in the regulation of pension investment managers.

The present letter consequently makes the same request of the FCA, asking it to provide information on how it oversees liability-driven investment funds and what steps it has taken in recent years to minimise the risk to consumers imposed by the collapse of DB pension funds.

Additionally, the two House of Lords committees note that Mel Stride MP, Chair of the Treasury Select Committee, has stated that the BoE, TPR, and the FCA are co-operating “to ensure LDI funds are better prepared for future stresses given the current volatility in the market”. The letter requests that the FCA provides further information on its contribution to this joint effort.

A written response from the FCA has been requested as soon as possible.

For further UK financial services regulatory updates, please visit the Burges Salmon blog.