The FSA is to introduce changes next month to allow life insurance companies to invest in a wider range of unit-linked assets.
The changes, which come into effect on October 6, are part of the regulator’s move to a more principles-based regime for unit-linked investments.
The current ‘permitted links’ rules governing which assets the unit-linked insurance sector can invest in have been in place since 1994 and the FSA says they were in need of an update to reflect market changes.
For example, the regulator says a new category of ‘institutional policyholder’ has been created due to changes to the way land and property is defined and can be held.
FSA director retail policy and asset management sector leader Dan Waters says: “We have taken the opportunity to move away where possible from detailed rules and replace them with a set of more principles-based high level rules.
“This is a practical expression of how the FSA is moving towards more principles-based regulation and will give the firms affected greater flexibility in investing whilst maintaining an appropriate level of consumer protection.”