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ABI says EU should oversee regulators

The Association of British Insurers says major structural changes to UK regulation would be a “distraction” from current challenges but says an EU supervisor is needed to oversee national regulators.

In its Regulation and Markets for the 21st Century report, the ABI says there needs to be greatly enhanced cooperation between the tripartite authorities but says it does not support excessive new regulation.

The report says: “While the ABI continues to support the UK regulatory structure of the tripartite authorities, improvements are needed to ensure better co-ordination between them. Going further is not necessary.

“Structural change will not solve problems of poor communications. The breakdown in dialogue is just likely to be shif-ted to a new boundary and structural change would be distracting at a key moment.”

The ABI says proposals for a twin peaks approach to regulation could drive up costs by increasing competition between regulators and could make a unified national front more difficult to achieve. But it champions the creation of an EU body that would act as a supervisor of national regulators.

It says: “It would not undertake supervision itself but it would have oversight of the supervision conducted by national supervisors, with group supervision arrangements being a particular concern. The body should be responsible for ensuring consistent supervision standards across Europe, with binding mediation powers necessary for that role.”

But Highclere Financial Service partner Alan Lakey says: “Unless the European Commission fully understands the nature of advice and why it is important, the danger is that some directives coming out of the EU will not be fit for purpose.”

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