The deputy governor for Prudential Regulation and CEO of the UK’s Prudential Regulatory Authority (PRA) has said the country’s regulatory and economic systems have scaled a mountain post the global economic crisis but there is a need to keep the crampons on.

In a speech in the City of London Sam Woods (pic) said the Uk can be proud of its resilience but it cannot rest on its laurels.

“After two major overhauls with new regimes in 2016 and 2024, and following vigorous debate on some aspects, I believe we are now also into a more settled period for the prudential regime for insurers,” he explained. “This should create more clarity and bandwidth for our insurers to focus on protecting policyholders, investing in the economy and delivering returns for their shareholders – noting that the large, listed annuity writers have seen an increase in their share price of about a quarter over the last twelve months.”

Woods added: “We have clambered out of the EU without major mishaps in financial services. And as that strenuous challenge of climbing out has now fallen away, we have been able to admire the view from our position outside the EU and focus more on seizing the opportunities Brexit provides to make our regime a better fit for our market.

“The system has successfully weathered some quite severe blizzards and gales in recent years – with our banking and insurance sectors remaining robust and able to support the UK economy throughout. It is worth observing, however, that our financial system was shielded by fiscal and monetary policy from much of the impact of the most severe macro downturn we have experienced in recent years – Covid and the energy impacts of the Ukraine war – future downturns may look different.”

Woods continued: “So these are my grounds for optimism. We’ve climbed the mountain and are still in one piece. Commercial returns have now caught up. And scanning the world from our new vantage point, we can see opportunities afforded by technological change.

“Set against this, we can also see that the world is a dangerous place. The geopolitical landscape is bleak. Cyber-attacks are relentless. New technologies, if not well governed and controlled, have the potential to cause significant disruptions. And within the financial services sector, there is plenty to worry about – including opaque and complex private lending by non-banks, recent cracks emerging in US credit, the risk of an AI bubble, and overly concentrated life reinsurance structures.

“But my point is this: given the hazardous terrain in which we now find ourselves, we seem reasonably well-equipped. So how does all this sit with the objective we have from Parliament to facilitate competitiveness and growth, and the government’s desire to boost growth by easing the burden of regulation? “

Woods continued: “We’ve been climbing the mountain since the Global Financial Crisis we’ve been learning how to use our new equipment, and which bits matter most. There are some spare ropes, back-up tents and other bits of kit that we now know we can live without. Maybe we can get rid of that wing-suit we packed just in case we needed to leap off a cliff. But we must keep our crampons, our ice-axe, and our warm sleeping bag. We will face many future avalanches and storms and we must survive them. We will also surely face in the future many more laboured sporting analogies from regulators, which may be harder to tolerate.”

He concluded: “In short, I think we are well equipped in a tricky terrain.”