In October 2001, the Treasury requested details of FSA's proposed response to the regulatory issues contained in its report on the regulation of Equitable Life - the 'Baird Report'. The FSA responded in November 2001 through its report entitled 'The Future Regulation of Insurance'. This report sets out the actions that the FSA has already taken, has in hand and plans to take in order to strengthen insurance regulation. These actions will have a major impact on the way in which insurance companies will henceforward be regulated.
A table setting out the three key changes to be made may be seen below.
To access a copy of the FSA report please click here
Objective
Method
Delivery
A fair deal for consumers
Improving disclosure of relevant information throughout a product’s life cycle
More focused use of existing FSA rules (1.4.7). While FSA does not seek to prevent all collapses or lapses in conduct (1.4.9), it hopes that this will be of benefit to consumers.
FSA refers to delivery through the ongoing With-Profits review, changes to the polarisation regime, and the proposed review of disclosure requirements.
Sound management & adequate financial resources
Strengthen the prudential regime by improving the basis upon which solvency requirements are determined; requiring management to introduce stronger systems and controls; improving reporting requirements. FSA recognises that this may lead to further industry restructuring (1.4.5).
FSA plans to achieve this through the existing SYSC and APER rules.
FSA also refers to the new integrated Prudential Sourcebook due for implementation in 2004, and to the impending EU solvency directive and to international accountancy standards.
Smarter regulation
Be a more proactive regulator and improve co-ordination between prudential and conduct of business regulators. In particular
· Gain a fuller understanding of the risks firms face
· Build a more effective relationship with firms
· Deliver integrated regulation
FSA will achieve this through internal restructuring, use of specialist advice and ongoing training.
