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ABI warns against major regulatory changes

The Association of British Insurers says major structural changes to the UK regulatory regime would be a “distraction”, but adds that 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 it does not support excessive new regulation.

The report states: “Whilst 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 shifted 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 costs up by increasing competition between regulators and could make a unified national front more difficult to achieve.

But it championed the creation of an EU body that would act as a supervisor of national regulators.

The report states: “It would not undertake supervision itself, but 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. Over time the body would take the lead in the development of supervisory rules.”

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