The FSA has outlined new rules designed to ensure that mixed financial groups hold sufficient capital on a group wide basis under the implementation of the EU Financial Groups Directive.
Under the rules, insurance groups will have to meet the FSA capital requirements for the whole group, as is already the case for banking groups. The FSA proposes to introduce this requirement gradually, in line with proposals for enhanced capital requirements for insurance firms on a solo level.
Clive Briault, director of prudential services at the FSA said: "Regulators need to keep pace with the development of cross sector financial groups, many of which also operate in more than one country."
"These proposals are designed to protect consumers and to improve the safety and soundness of the financial system through group capital adequacy and systems control requirements, and through enhanced international supervisory cooperation."
The rules are designed to introduce greater cross-sector consistency in the treatment of financial groups, said the FSA.
It added that the proposals followed internationally agreed principles and global minimum standards for the supervision of financial groups.
