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ABI accuses FSA of dodging risk issue

Life insurers are accusing the FSA of washing its hands of the Treasury select committee’s recommendation for an industrywide rating system for investment funds.

In its latest meeting with the Financial Services Forum, the FSA said the dangers of implementing such a system were too high but it gave invited the industry to come up with its own initiative.

The Association of British Insurers, which is piloting an industrywide risk-rating system, says the FSA is failing to take the initiative on the issue.

The plan is opposed by the Investment Management Association,

In its report last year entitled, Restoring Confidence in the Long Term Savings Industry, the Treasury select committee asked the FSA to investigate a traffic-light risk-rating scheme for investment funds to help consumers and advisers.

An ABI spokesman says: “There is a compelling case for single risk indicators but it is not going to work without the full co-operation of the FSA.”

Which? principal policy adviser Mick McAteer says: “We have the worst possible scenario where customers are confused by companies having different risk indicators. The FSA is just scared of damaging its reputation and devolving regulatory responsibility to the industry.”

Royal London head of corporate affairs Gareth Evans says: “As the organisation that polices the industry, the FSA is the only body capable of implementing this.”

But IMA spokeswoman Mona Patel “Risks are multi faceted so a single risk indicator would not work.”

The FSA declines to comment on the matter.

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