New ABI director-general criticises over-zealous approach to Euro-directive
The ABI’s new director-general has issued a rallying call for the entire UK insurance industry to resist moves by Euro-regulators to over-capitalise the sector via the Solvency II directive.
Kerrie Kelly, giving her first speech since taking the helm of the ABI, accused Ceiops (the Committee of European Insurance and Occupational Pensions Supervisors) of ignoring the risk based approach that is meant to underpin the draft directive.
“What was originally a sensible and well considered directive, designed to assist the smooth operation of the single market by delivering a common risk-based regime of capital requirements and supervision has instead become a vehicle for European regulators to require layer upon layer of additional capital.
“In doing so, they ignore the fundamental risk-based approach of the directive and the need to recognise the social and economic value of insurance products that are accessible and affordable – points which I know are now emerging in the (European) Commission’s impact assessment.”
Kelly, who took up her post as ABI director-general last month, said that the potentially harmful consequences for customers and investors of excessive capitalisation had been highlighted in last week’s report by CEA, the umbrella group for the European insurance industry.
“It is essential that everyone – ABI, industry members and those FSA and Treasury officials representing the UK – support the Commission in pushing back against the extreme conservatism of the Ceiops advice to ensure common sense prevails.”
She also said urged close co-operation between the Bank of England and the Conservatives’ mooted Consumer Protection Agency if the Tories win the next election and introduce their proposed overhaul of financial regulation.
And she urged the FSA to keep its regulatory involvement “proportionate to the risk posed to consumers and shareholders”.
“It is also important that if granted the extended redress powers proposed in the Financial Services Bill, the FSA will exercise these powers only when there is strong evidence justifying its use, avoiding retrospective changes to the standards firms are judged by.”