The Association of British Insurers has published five key principles to “help ensure that regulatory reform brings real benefits for consumers, ahead of next week’s Turner review into regulation and the G20 London Summit on 2 April,” said the organization’s press bulletin.
In the discussion paper “Regulation and Markets for the 21st Century,” the ABI also calls for establishing an European Union (EU) body that would act as a “supervisor of supervisors” to improve oversight across the single market. Over time, the body would also take the lead in the development of supervisory rules.
The ABI’s five principles areas follows::
— A safe and secure financial services system – The ABI believes greatly enhanced co-operation between the Tripartite Authorities is essential, but major structural changes in the UK would be a distraction.
— Prudentially sound firms – Solvency II must be adopted in Europe, supervision has to improve, more box ticking is not the answer and regulators should better understand the business of firms. Macroeconomic rules must be taken into account by supervisors.
— Competition and innovation – Competition drives down charges, promotes choice and innovation and enables customers to diversify their risk. The Financial Ombudsman Service should focus on arbitration, not policymaking.
— Regulation that works across borders – The ABI supports the goal of creating an EU ‘supervisor of supervisors’.
— Capital markets that are connected to consumer needs – We call for a debate on the annual re-election of directors and the role of the chairman and the senior independent director (SID) to strengthen governance. The ABI calls for fair value to be preserved as the basis of financial reporting.
Stephen Haddrill, the ABI’s Director General, added: “Industry, regulators and the Government must put consumer interests at the heart of crucial decisions on regulation to be taken in the coming months. We need to learn lessons and get those decisions right. The principles we have outlined will ensure that regulatory reform has maximum impact and helps consumers regain confidence in business, regulators and ultimately public authorities.
“Lack of trust and co-operation between national regulators has been a notable feature of this crisis. This is worrying, as cross-border financial organisations must lead the economic recovery in Europe and beyond. An EU body which ‘supervises the supervisor’ would ensure that the problems of the recent past do not arise again.”
The ABI also noted that the UK’s insurance industry is the largest in Europe. In total, European insurers generate premium income of €1.110 trillion [$1.143 trillion], employ over one million people and invest more than €7.2 trillion [$9.388 trillion] in the European economy.
Source: Association of British Insurers – www.abi.org.uk
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