The UKs Financial Services Authority (FSA) does not need to develop new rules and regulations or introduce further radical interventions, which risk stifling the market and restrict consumer choice, says the Association of British Insurers (ABI).
As recommended in the ABIs response to the FSAs discussion paper on product intervention, the regulator would be better served focusing on more effective, proactive and consistent supervision and enforcement of existing rules that underpin the core principle of treating customers fairly.
We want to see a balanced risk based regulator which oversees a market which delivers positive outcomes that meet consumer needs and expectations, says Otto Thoresen, the Director General at ABI. This will only be achieved by maintaining a healthy level of consumer choice and market competition. Meeting this objective requires the Government and the regulator to recognise the inter-connectivity of a series of initiatives that form part of an overall package of reforms at both the UK and EU level. Any major change should not occur in isolation, but has to fit with the whole suite of existing and planned regulatory developments.
The UK insurance industry is the third largest in the world and the largest in Europe.
It is a vital part of the UK economy, managing investments amounting to 24% of the UKs net worth and contributing the fourth highest corporation tax of any sector. Employing over 275,000 people in the UK alone, the insurance industry is also one of this countrys major exporters, with a fifth of its net premium income coming from overseas business.
The ABI added that we do not consider that the FSAs Discussion Paper is well placed within the wider regulatory reform context, so we urge the FSA and the Government to ensure that the forthcoming vision document for the FCA takes a holistic view that is focussed on delivering good consumer outcomes.