Otto Thoresen, ABI director general, presented the following issues on regulation in his lecture at the Insurance Institute of London on 26th January 2012:
“Closer to home are some of the developments in regulation both in the UK and Europe. The European pipeline of regulatory change is a very full one, with Solvency II a key file. We cannot pretend that the recent European veto made our lives any easier – we now face a situation where our European colleagues are more aware of anything we want to negotiate which could look like special treatment for the UK.
It is incumbent on us to maintain strong alliances and to make a strong case for change to those rule changes which could hinder rather than help. We can’t change our geography. The European market is 330 million people sitting on our doorstep. So we need to keep adapting to the challenges our neighbours face and ensuring we continue to be an active part of that community. At the same time maintaining control of the levers which drive our economy – whether that relates to the level of capital we hold in banks or the taxes we raise on businesses and our citizens.
Turning back to the UK regulatory agenda, we have reorganised the ABI to create two regulatory divisions – our own Twin Peaks model. Our prudential division faces the same concerns as Lloyds market members – on capital requirements, Solvency II and tax - and in this field the issues of our relationships with Europe loom large.
Our focus remains getting Solvency II over the finish line, and we are working hard with the FSA for internal models to be agreed on time, while making reasonable requirements on data. There are still improvements to be made however, for example, on the calibration of the capital charge for catastrophe risk in the standard formula.
On tax, seeking a sensible outcome on the controlled foreign companies tax regime is also a key priority – one made ever more difficult against a backdrop of a tough government fiscal position.
A competitive, global UK insurance industry is an essential contributor to a viable UK. Together, the ABI and the London market can be a much stronger voice in achieving success for the industry, and we will continue to work closely with Lloyds, the Lloyds Market Association, the Investment Underwriters Association and P&I Clubs.
On the conduct side, the creation of the Financial Conduct Authority is another moment of truth for the UK financial services industry and the citizens of this country. 2012 will be the year when the debate settles and we see what kind of conduct regulation government has in mind for the UK.”
Full speech
© ABI
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