The Association of British Insurers has urged the FSA to not introduce “further radical interventions” in product regulation in response to its recent discussion paper.
In its response, the ABI says that the FSA should not “introduce further radical interventions which risk stifling the market and restrict consumer choice”.
The ABI says that instead the FSA should focus on more effective, proactive and consistent supervision and enforcement of existing rules that underpin the core principle of treating customers fairly.
This will address any developing market failures and increase consumer confidence in the industry.
In January, the FSA launched product intervention discussion paper that outlined it could force advisers to take further qualifications when advising on specific non-mainstream products it fears could lead to poor customer outcomes.
ABI director general Otto Thoresen says: “We want to see a balanced risk based regulator which oversees a market which delivers positive outcomes that meet consumer needs and expectations. This will only be achieved by maintaining a healthy level of consumer choice and market competition.”
He adds: “Meeting this objective requires the Government and the regulator to recognise the inter-connectivity of a series of initiatives that form part of an overall package of reforms at both the UK and EU level. Any major change should not occur in isolation, but has to fit with the whole suite of existing and planned regulatory developments.”
Thoresen says that the FSA product intervention paper is not “well-placed” within the wider regulatory reform context and so the FCA should take a “holistic view that is focussed on delivering good consumer outcomes.”