The Bank of England has set out plans to stress test UK banks and insurers against the financial risks posed by climate change, ranging from lending to fossil-fuel producers to mortgages on properties in flood-prone areas.

The bank, which regularly assesses the UK financial system’s resilience to economic shocks, said it would devote the next edition of its two-yearly review of broader risks, due in 2021, to climate change. The decision was spurred by former adviser Huw van Steenis’s Future of Finance report, published in June.