The new financial regulatory regime and the regulation of insurance
| DOI | https://doi.org/10.1108/eb024983 |
| Date | 01 April 1998 |
| Published date | 01 April 1998 |
| Pages | 320-325 |
| Author | Mark Boléat |
| Subject Matter | Accounting & finance |
Journal
of
Financial Regulation
and
Compliance
Volume
6
Number
4
The new financial regulatory regime and the
regulation of insurance
Mark Boléat
Received: 25th August, 1998
Association of British Insurers, 51 Gresham Street, London EC2V 7HQ; tel: 0171 600 3333;
fax: 0171 216 7302
Mark Boléat is Director General of the
Association of British Insurers. He has
degrees in Economics and Contemporary
European Studies and before joining the
ABI in 1993 was Director General of the
Council of Mortgage Lenders and the
Building Societies Association.
ABSTRACT
This paper examines the
creation
of
the
Finan-
cial Services Authority, concentrating on the
implications
for the insurance industry and the
issues that will be raised in the transition to the
new regime. It concludes that a more coordi-
nated approach to regulating financial institu-
tions will have a beneficial effect on the
insurance industry, but that there will also be a
downside. Much that is good about the present
system may be lost, while there will be two to
four years of uncertainty as the new rules are
made and implemented.
INTRODUCTION
In the summer of 1997, in two stages, the
government announced that it would
replace almost all existing regulators in the
financial sector with a single regulator, sub-
sequently christened the Financial Services
Authority. One year on, much of the
groundwork has been done and some of
the new arrangements have been put in
place.
At the beginning of June, responsibility
for banking supervision formally trans-
ferred from the Bank of England to the
Financial Services Authority (FSA), and
the staff of the self-regulatory organisations
(SROs) operating under the existing
Financial Services Act were ceded to the
FSA which now provides services on con-
tract to the boards of the SROs.
At the end of July, the government pub-
lished a draft of the Financial Services and
Markets Bill together with an accompany-
ing consultation document. Comments are
sought by 30th October. It has been the
general understanding that the Bill would
go through Parliament in the 1998-99 ses-
sion, probably becoming law at the begin-
ning of 2000. It now seems very likely that
this timetable will slip. As the consultation
period docs not end until 30th October,
the Bill is unlikely to be ready to be pre-
sented to Parliament until early in the new
year. There have also been suggestions that
the Treasury Select Committee would like
to consider the draft Bill, and this it cannot
sensibly do until the new session of Parlia-
ment. The most optimistic scenario is that
the Bill may just squeeze into the 1998-99
session but would not achieve the Royal
Assent until the very end of that session. A
more likely scenario is that the Bill will be
delayed for a year, becoming law in 2000
and coming into effect at the end of that
year or, possibly, 2001.
The new regime will have a significant
impact on the insurance industry. This
Journal of Financial Regulation
and Compliance, Vol. 6, No. 4,
1998, pp. 320-325
© Henry Stewart Publications,
1358-1988
Page 320
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