Speaking at the FSA Insurance Sector Conference in London today, Kelly, who succeeded Stephen Haddrill in the role, says the ABI’s members need to see that the FSA is “open-minded and balanced”.
She says: “Whether it is the culture of Arrow visits to relatively small insurers, or the attention that is paid to matters such as financial promotions, our members need to see that FSA involvement is proportionate to the risk posed to consumers and shareholders.
“It is important that the FSA is still open-minded and balanced about its judgements on likely consumer detriment and what consumers actually want.”
She adds that if granted the extended redress powers proposed in the Financial Services Bill, the FSA must exercise them only when there is strong justification to do so, avoiding retrospective changes.
Kelly also claimed Solvency II remained “intensely frustrating”.
She says: “It remains intensely frustrating that what was originally a sensible and well considered directive, designed to assist the smooth operation of the single market by delivering a common risk-based regime of capital requirements and supervision, has instead become a vehicle for European regulators to require layer upon layer of additional capital.
“In doing so, they ignore the fundamental risk-based approach of the directive and the need to recognise the social and economic value of insurance products that are accessible and affordable.
“These proposals are now being scrutinised very closely by the European Commission and it is essential that everyone – ABI, industry members and those FSA and Treasury officials representing the UK – support the Commission in pushing back against the extreme conservatism of the Ceiops advice to ensure common sense prevails.”