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Member, Beacon International Group, Ltd.
LONDONThe proposal to replace the Financial Services Authority with two new regulators may harm the London insurance market’s competitiveness, the International Underwriting Assn. said Monday.
The IUA said its members are concerned that the introduction of two new supervisory bodies could lead to duplication of regulation.
The U.K. Treasury this month outlined details of its plan to replace the FSA, which regulates the insurance industry, with two new regulatorsthe Prudential Regulation Authority and the Financial Conduct Authority.
Insurers would be regulated primarily by the PRA, but also would come under the scope of the FCA, according to the Treasury.
Part of the FSA’s mission was to consider the role of the City of Londonthe U.K.’s financial centeras an international hub for financial services business, the IUA said in its statement. But the Treasury proposals do not appear to consider this aim, according to the IUA.
“Competition in our industry is as fierce as ever, and unless London remains an innovative and efficient place to do business, there is always a danger of it losing out to other financial centers around the world,” Nick Lowe, the IUA’s director of government affairs, said in a statement.
In addition, IUA members are concerned about the possibility of regulatory overlap, he said.
“We will have to consider how these two authorities operate in practice, but clearly there must be close cooperation between the regulators,” Mr. Lowe said in the statement.
The IUA said it will gauge members’ opinions before submitting a formal response to the Treasury’s proposals.
Lloyd’s of London will be regulated by both new bodies, although the PRA will be its main regulator, according to the Treasury proposals.
The Treasury’s consultation document, “A new approach to financial regulation,” can be viewed at http://www.hm-treasury.gov.uk/d/consult_newfinancial_regulation170211.pdf.