LONDON: The British government’s proposed changes to insurance sector capital rules present a risk to policyholders but not to the wider financial system, the head of the Bank of England said on Monday.

The finance ministry overrode the BoE and proposed looser rules for insurers which it said will help the sector to invest in infrastructure and boost economic growth.

“I don’t think that it’s likely, all things equal, that it’s a risk to financial stability, but it is a risk to policyholders,” BoE Governor Andrew Bailey told parliament’s Treasury Select Committee.

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Bailey said the BoE had not agreed to accept the government’s proposals on insurance capital rules in return for the government withdrawing plans to give itself powers to veto decisions by financial regulators.

Bailey said he would not consider that sort of “trade”.