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John Tiner |
In an interim report published this week, the Financial Services Authority (FSA) announced that it would call for a more principles-based approach to insurance conduct of business regulation. An FSA review has found that the general insurance markets work well. The FSA is therefore seeking to remove any requirements for firms beyond the minimum EU Directive requirements.
FSA Chief Executive John Tiner, at the FSA's Insurance Sector Conference held in London, said: "There is now a strong case for moving to a differentiated regulatory regime, expressed in a more principles-based way, where the focus is on outcomes for consumers rather than processes within firms. Our insurance rules will be more risk-based and proportionate while continuing to meet our consumer protection objective".
In a response to the FSA's comments, Stephen Hadrill, Director General of the Association of British Insurers, welcomed the plans and said "Customers will benefit from the FSA's simplified, principles-based and proportionate approach to regulating general insurance". He went on to request that the FSA pressure the European Commission to apply a principles-based regime to all EU insurance directives.
The FSA will publish a Consultation Paper on possible rule changes in June 2007 and any changes to the conduct of business rules likely to be made in December 2007. At the same conference, however, the FSA was critical of the behaviour of insurance companies in the areas of Critical Illness and Payment Protection Plans insurance.
Also this week the US's SEC announced that it would make conditions of delisting from US exchanges a simpler process for foreign firms. It has been that no firm can delist if it has 300 shares held by US investors – the so-called "Hotel California" effect. The SEC is expected to change this to allow firms to delist if they can show that US shareholders account for 5% or less of their global trading volume.
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