15 May 2013

FCA/Wheatley: Meeting the growth challenge

Speaking at the BIBA conference in London, Wheatley looked at the growth of UK insurance, and at how the general insurance industry has been characterised over the years by its attention to customer service.

The focus on policy-holders, focus on client interests and delivery, is a point Mr Wheatley particularly looks at because it’s a strength of UK insurance that goes back a long way. A strength that helps understand how and why the market has achieved such dominance over the years.

The fact that the UK insurance industry has performed to these high standards, and performed to them so consistently, tells all what needs to be known about why it is now the largest general insurance market in Europe and third largest in the world. It also helps explain why UK brokers are chosen to act as intermediaries on more than half of all insurance deals struck in the domestic market.

Mr Wheatley’sambition is regulation to support this success. He wants the FCA to act in the interests of BIBA and its members. He wants to ensure the UK insurance market works well. That is, by delivering valued services to customers.

This is FCA’sgrowth challenge and it is one of the reasons why the FCA has been given the explicit objective by Government of making markets work well. Not just for general insurance, not just for those buying your services, but for firms and consumers across the wider financial sector as well. For all the markets in this country that create jobs and wealth.

But this challenge requires us a new approach to regulation. Where markets and consumers didn’t neatly fall into these economic models, the stock response was always to provide more information. These are the kind of issues we’re dealing with. Broad-brush issues over trust; poor quality of advice; information asymmetries and misaligned incentives.

Very few markets in the financial sector have emerged with their reputation intact following the financial crisis. Firms, governments and regulators around the world have been swept along by conduct crisis after conduct crisis.

Mr Wheatley said: “Our insurance markets, however, remain strong. It is my job, it is the FCA’s job, to make sure that is the case for many years to come.” “That is an enormous responsibility. But it is also a great privilege and I want to ensure that this journey we’re on is a true partnership.”

Full speech

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