The chairman of the FSA, Callum McCarthy, has joined the battle to stop the EU introducing legislation that would ban gender discrimination by insurers.

Speaking at the Global Financial Leadership Forum, McCarthy warned of a potential £1bn cost if motor, pension and life insurers were not allowed to price according to risk.

He called on the government to oppose the idea.

He said: "For motor insurance, young women drivers are likely to face an increase in premiums of between 10% and 30%."

McCarthy went on to question whether the implications of any change had been thought through and called the directive unrealistic.

He was joined in criticising the draft law by ABI director-general Mary Francis, who argued that the law would not work in favour of the market or the consumer.

She said: "The FSA's intervention in this debate is highly significant. The regulator is joining a growing consensus in the industry and outside which can see these proposals hurting many millions of customers.

"The FSA has to speak up for the consumer interest and for the good of the financial markets. On both counts, the draft directive in its unamended form would fail the test."