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&#39Political concerns driving waivers&#39

Analyst Ned Cazalet has criticised FSA solvency waivers for allowing weak companies to continue writing new business and for being driven by political rather than regulatory concerns.

Last week, the FSA again sent letters to with-profits offices to offer waivers. In the letter, it says it is using special powers to override its statutory duties to consult because of concerns about the potential for consumer detriment if it does not act quickly.

But Cazalet asks if, in five years time, people might think the regulator was foolhardy to have relaxed its regulations. He says the FSA has been forced into this action by the wiping out of the sector&#39s capital base.

Cazalet says: “The waivers are driven not by regulation but by politics and consumer confidence. We have observed firms who will continue to write new business who perhaps should not. It is rubbish to say that the only companies going for the waivers are strong companies.”

Needanadviser.com director Jo Roberts says: “It is a tough call. In an ideal world, there would be no waivers but it is not ideal. If the FSA did not offer waivers, there would be only a few insurance firms left.”

FSA spokesman Robin Gordon Walker says: “The purpose is to stop unnecessary forced selling of equities and nothing to do with propping up weak companies.”

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