FINWIRE®

Regulation and Markets for the 21st Century

March 26th, 2009

The Association of British Insurers has published five key principles to help ensure that regulatory reform brings real benefits for consumers.

In the discussion paper Regulation and Markets for the 21st Century, the ABI also calls for an EU body that would act as a ‘supervisor of supervisors’ to improve oversight across the single market. Over time, the body would also take the lead in the development of supervisory rules.

The five principles are:

A safe and secure financial services system – The ABI believes greatly enhanced co-operation between the Tripartite Authorities is essential, but major structural changes in the UK would be a distraction.

Prudentially sound firms – Solvency II must be adopted in Europe, supervision has to improve, more box ticking is not the answer and regulators should better understand the business of firms. Macroeconomic rules must be taken into account by supervisors.
Competition and innovation – Competition drives down charges, promotes choice and innovation and enables customers to diversify their risk. The Financial Ombudsman Service should focus on arbitration, not policymaking.

Regulation that works across borders – The ABI supports the goal of creating an EU ‘supervisor of supervisors’.

Capital markets that are connected to consumer needs – We call for a debate on the annual re-election of directors and the role of the chairman and the senior independent director (SID) to strengthen governance. The ABI calls for fair value to be preserved as the basis of financial reporting.

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