Proposed regulatory system "unsuitable" for general insurers
The Lloyd’s Market Association (LMA), the body representing underwriters' interests at Lloyd's has argued the proposed UK financial services regulatory system will create costly "triple regulation" within the Lloyd’s market.
The UK government is due to consult the market in 2011 on a new act to replace the Financial Services and Markets Act with the aim of putting the new regulatory system in place in 2012.
In its official submission to HM Treasury’s consultation on the future UK financial regulation, the LMA agreed strong regulation is needed but argued that the new system is geared too heavily towards banking, describing it as “over-engineered, unsuitable and unjustifiably costly for the general insurance industry.”
The LMA also argued that the proposed Prudential Regulatory Authority (PRA) and the Consumer Protection and Markets Authority (CPMA) will have overlapping roles which could see managing and members’ agents within Lloyd’s face triple regulation from the PRA, the CPMA and Lloyd’s itself.
LMA chief executive David Gittings said: “Our view is that as much as possible of Lloyd’s market regulation should be kept in one place and, given that most of the Lloyd’s expertise from the FSA is, we believe, to be transferred to the PRA, then this makes it the obvious regulatory body for Lloyd’s and agents alike.”
“In addition we believe that proper prudential regulation of Lloyd’s brokers is also necessary, in view of the reliance placed upon them by managing agents to handle significant premium and claims monies.”
The LMA has also expressed concern that the proposed changes are coming at a critical point with three major EU regulatory initiatives also underway including Solvency II, Intermediaries Directive Review and the new EU super-regulator EIOPA.