Nobbled by industry

Today in InsuranceERM.

Sharon Bowles has attacked the UK’s accounting standards Endorsement Board (UKEB), saying anyone who endorses the upcoming IFRS 17 insurance contracts standard is probably in the pay of the insurance industry.

The former MEP, who oversaw the development of Solvency II, now sits as a Liberal Democrat peer in the House of Lords, the UK parliament’s upper tier.

At a 27 April Lord’s committee hearing on the legislation to empower the UKEB, Bowles highlighted IFRS 17 as an example of a standard issued by the International Accounting Standards Board that would not give a “true and fair” view of a company’s position.

Complaints about the UKEB’s scrutiny process are already emerging.

Dean Buckner, policy director of the UK Shareholders’ Association, and a former member of the UKEB’s Insurance Technical Advisory Group (TAG), has also petitioned for the TAG to debate whether liabilities should ever be discounted at more than the risk-free rate under IFRS 17. But he found the process “poorly designed to address the issue”.

In a letter to the UKEB chair Pauline Wallace, seen by InsuranceERM, Buckner described the scrutiny process as “stage managed and scripted”, with TAG members simply asked whether they agree or disagree with clauses.

The TAG membership is “dominated by preparers and their auditors”, and they were under pressure to conclude their judgement quickly, he said.

“The expectation is that the standard will be endorsed. I was told that my objections were causing delay, even that you (as chair) had complained of such delays, that time is moving on, and so on. This makes it difficult to challenge the process,” Buckner wrote in the letter.

On the other hand, Conservative Martin Callanan defended the makeup of the UKEB: “Membership is representative of areas with an interest in the quality and availability of accounts. This naturally includes representatives with experience in the biggest accounting firms, as their expertise and insight will be invaluable.” That’s OK then.