FSA actively seeks spies without ties to major insurers

The Financial Services Authority (FSA) is seeking three `grey panthers' to prowl the insurance industry looking for early signs of malpractice and financial crisis.

According to an FSA spokesman, one position had already been filled by Martin Roberts, who was recently replaced as director of insurance regulation by David Gittings, the former head of regulation at Lloyd's.

On 1 April, Roberts takes up a new part-time role as senior adviser on insurance regulation, focusing on the international market.

The spokesman said two other "senior figures" in the industry were being sought for part-time positions to advise the FSA.

So-called grey panthers have been active in the banking side of the FSA for a few years now.

"The job would be very much based on an informal role where the adviser would use his or her long-standing experience, contacts and industry expertise to help the FSA understand the marketplace better," said the spokesman. The two figures could be recruited by the end of the month, he added.

Such a short timescale to find senior executives without links to major insurers did not leave the FSA with many options, said one leading insurer.

"Finding someone from a major insurer who has severed all ties with his old employer is going to be difficult. There is a massive conflict of interest if the person has not left the company for good.

"It will probably have to be someone from the industry because, though Roberts knows a lot about regulation, his experience in the field is limited," he said.

Grey panthers have played a key role in the banking industry since the Barings collapse, acting as respected watchdogs to monitor the industry for impropriety, but also to keep an open dialogue between the regulator and the industry itself.

One senior broker told Insurance Times it was "about time the FSA took pro-active action" but worried that if the person were too senior he could be open to the charge of cronyism.

"Say a Tony Lancaster were to take the position. Would he be too involved with the big players and his old colleagues to take an objective view of the situation?" said the broker.

He added that the role should be about "exposing the cowboys rather than kicking the industry in the balls".

However, insurance training expert Robin Wood, welcomed the move: "I think it's a brilliant idea, absolutely spot on. The FSA seems to understand the industry much more now and it understands that it needs people who have the nous to get under the skin of the industry and not to just analyse what's on the surface.

"I also think it can genuinely achieve what it has set out to do, namely improve the industry for the public and finally eradicate some of those practitioners who have less integrity than others," he added.

Though the position would be senior, it could be from any sector of the industry. Wood said an ex-loss adjuster "who has seen things go wrong over and over again" would be ideal.

Asked whether the person should have a compliance background, the FSA spokesman said the recruitment agenda was being kept "as wide as possible".

A spokesman for the Association of British Insurers (ABI) said: "It is important that none of the inventions is seen as a way of catching people out, and that the industry can operate and function freely.

"Provided the action is proportionate to the offence, then we welcome this move."

In a separate development, the FSA also confirmed it was establishing a new director's position to oversee intermediaries.

The new `director of high street firms' will work alongside David Kenmir, director of authorisation, and report to John Tiner.

The position will regulate both mortgage and general insurance brokers, though the FSA has not set a definite timetable for recruitment.

"We cannot say as yet what scope the new director will have in relation to regulating small firms and their prudential health, because we have to wait for the Treasury to give us its final approval on the Tiner project.

"We are looking for both external and internal candidates over the coming months," said the FSA spokesman.