As Labour announced the 5 May election, the Conserv-ative Party this week pledged to place power to regulate financial services back into the hands of the insurance industry.

In Competition and Competitiveness: a new agenda, shadow minister for financial services Richard Spring promised to create an independent board of directors to oversee the FSA, if the Conservatives are elected.

The board would consist of representatives of the insurance industry and other financial services.

It would meet six months after a general election victory to "ensure that staff numbers are on a downward path, that a new culture is in place and that the regulator was demonstrably invoking a lighter touch".

According to Spring, the move is part of a wider goal to make the UK insurance industry more competitive by looking at the financial benefits of different forms of regulation.

Spring told Insurance Times: "We need to place the FSA at greater arm's length from the government. The regulator is currently far too close to the Treasury and this is inhibiting competition and creativity. "

The Conservatives suggest the FSA must not only protect consumers but should also act as "a champion of the insurance industry".

The proposals have been touted by some critics as a return to the self-regulation of the 1980s under Conservative rule.

' For an in-depth review of the Tories' proposals on regulation see page 10