New UK system will distinguish banks and insurers

The UK’s new financial regulatory system will recognise that large insurers do not pose the same risks to the financial system as large banks, according to Hector Sants, chief executive of the Financial Services Authority (FSA).

Speaking at an event hosted by data and news firm Thomson Reuters, Sants said: “We still do need to have an intensive and intrusive approach to large insurers for prudential purposes but it should be somewhat different from that which we have for the banks. It is our intention that our high-impact approach to insurers will be different to that of banks.”

The UK’s coalition government announced in June this year that it was to replace the FSA with three new bodies under the Bank of England: the Prudential Regulatory Authority (PRA), the Financial Policy Committee and the Consumer Protection and Markets Authority.

The new regulatory structure is expected to be complete in January 2013.