Following yesterday's email alert to Insurance Times readers, Insurance Times received an urgent call from the Financial Services Authority. See our exclusive report on the conversation.
Following yesterday's email alert to Insurance Times readers, Insurance Times received an urgent call from the Financial Services Authority. Here is our exclusive report on the conversation.
Financial Services Authority (FSA) spokesman Vernon Everett said yesterday "regulation cannot deal with systematic fraud". The FSA takes a view "on the back of audited accounts" and "is not there to correct all collapses".
"If there are poor business decisions which mean that companies go bust, that is part of the capitalist process," he said.
Everett's statement to Insurance Times formed part of a strong denial by the FSA that they had any reason to suspect malpractice at Independent until undisclosed reinsurance contracts were uncovered in May this year. The FSA specifically deny that the French regulator (CCA) warned them of malpractice at Independent's French subsidiary in December 2000 or January 2001. This conflicts with statements to Insurance Times from CCA. When asked by Insurance Times whether the FSA would publish the correspondence from the CCA, the FSA said they would "if CCA agreed". The FSA confirmed that CCA did raise concerns about "underprovisioning and the pricing of claims" and about "business processes".
The FSA response raises the question of what the regulator is for and what it does. If it cannot uncover fraud and is willing to let companies collapse, what is the point of paying large amounts of taxpayers' mo
