Fresh plans to merge the Association of British Insurers (ABI) with the British Bankers' Association (BBA) have received a cautious welcome from the industry.

A senior figure at Royal & SunAlliance (R&SA) said the move was a "good objective", but steps needed to be taken slowly to make sure members did not lose the technical expertise the ABI could give.

While a merger between the ABI and the BBA was mooted more than a year ago, a senior ABI source said members' views on the subject would be surveyed next year.

In an interview with Insurance Times (see page 14), ABI director general Mary Francis said: "Coalescence is needed to mirror the Financial Services Authority (FSA). We need to speak with a common voice."

The R&SA source said it was important the financial services industry could match the size and scope of the FSA. "We need to be able to man-to-man mark the FSA without overlap."

However, a senior broker said the move would increase lobbying power, but dilute the voice of the general insurance industry. He added it should be treated with caution because the government was said to favour such a move.

A source within the FSA welcomed the idea: "It will simplify our job, but there must be huge cultural differences that would have to be overcome," he said.

It may be that, at the very least, the two bodies could share lobbying firms and other overheads, he added.

BBA chief executive Ian Mullen said if members showed an interest then a merger would have to be considered. However, he added before any such moves were considered, the BBA would be watching how the FSA operates.

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