View more on these topics

Peer slams FSA’s ‘loss of proportion’ over Solvency II

Conservative peer Lord Ashton has attacked the FSA’s approach to implementing Solvency II, accusing the regulator “losing its sense of proportion”.

Speaking in a debate in the House of Lords yesterday, Ashton, who also works in the insurance industry said Solvency II has created a “tidal wave of bureaucracy and expense” for firms. He added that Lloyds of London, the Council of which he sits on as an external member, expects to spend around £300m to meet the new rules, not including ongoing compliance costs.

He said he does not advocate a return to light touch regulation but called on the Government to ensure financial services regulation is “implemented at a company level in a proportionate way”. He said the insurance industry did not need any financial support during the crisis and slammed the increasing regulatory burden for leading to “whopping” increases in levies paid by insurers.

Under the Solvency II directive, companies will be able to use a standard model to calculate the amount of capital they have to hold or develop their own internal models which must be approved by the regulator.

Ashton said: “The Lloyds internal model application pack alone will be 6,000 to 7,000 pages long. It is estimated the insurance industry is going to produce 500,000 pieces of paper to support Solvency II applications to the FSA.

“There is a strong feeling the FSA has lost its sense of proportion in implementing Solvency II. It is very sensitive to the charge of gold-plating regulation but many in the industry feel that in its insistence on more and more documents it has lost its perspective in regulating the process rather than the outcome.”

Recommended

IMA chief Richard Saunders to step down

Richard Saunders, chief executive of the Investment Management Assocation is to step down at the end of 2012. A process to find a successor will begin shortly. Saunders says: “After 11 years in this role I feel it is time for me to move on. “It has been a great privilege to work with a […]

Swip international equity director Steven Maxwell dies

Scottish Widows investment director, international equities Steven Maxwell has passed away. Maxwell stepped down from fund management in the final quarter of 2011 and passed away on April 8. Maxwell managed the £49m Swip European income fund and the £26m TU European fund. Maxwell joined Swip in 2004 from Standard Life Investments where he was […]

Santander appoints CIO as Bearman leaves

Santander Asset Management has named Butterfield Bank’s David Stewart as its chief investment officer following the departure of John Bearman. Stewart was group chief investment officer at Butterfield Bank, and previously head of investments at MGM Assurance. Bearman left Santander to become chief investment officer at Thomas Miller Investment. Thomas Miller Investment chief executive Mike […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. The FSA has no sense of proportion. Everything it turns its mind to costs everyone dearly. It has the uncanny habit of gold plating every jot and tittle.
    The FSA is not responsible for paying any money out, only collecting money in. It has no idea what it means to budget.
    It is a Leviathan with an appetite to match.

  2. Some plain and straight talk at last. Regulations as being done now are costing us jobs, slowing the ecomony and damaging the financial industry. When will we realise this and correct the situation?
    This industry needs UNION and the likes of Bob Crow, who stop the network if u fire 2 tube drivers! About time someone told the government!!!

  3. Please explain why the FSA needs to have a sense of proportion. It was given carte blanche to do what it wanted, as it wanted, in 2000. It is perfectly entitled to interpret the financial scene as it feels fit since it is not under any compulsion to explain or even justify its approach.
    It needs to maintain a healthy compliment of staff in order to present the impression of activity. As every one is aware its analysis of the the financial environment leaves a lot to be desired, and explained. Proportionality is not part of its legislative requirement. Ignore S2(3) (a) & (c) FSMA 2000 because that is merely gloss, and there is no requirement to justify any action that may not appear to correlate with the terms of these sections.
    After 12 years of blissful ignorance and looking the other way it strikes me that House of Lords are merely thumping an empty drum. The FSA have never shown a sense of proportion, merely a sense of self obsession and importance.
    I have no idea why the HoLs should bother their heads at this point in time. The HoCs is very happy with the FSA’s approach to regulation and to generating employment. Since the FSA budget does not fall under the definition of State cost the Government is very happy to look the other way, and has demonstrated that fact ever since it came to power. The Labour Government was no better.
    So can anyone explain why the HoLs should now be raising questions about the competence of the FSA some 6 or 7 years after the industry itself started to raise questions.
    The solution to financial problems has been worse than the problems themselves for quite sometime, and no-one in authority has seriously questioned this.
    So please explain why the FSA needs to have a sense of proportion.

Leave a comment