Accept the ‘new normal’ and carry on, says ABI

Otto Thoresen, who was speaking at the Insurance Institute of London last week, said competition was essential in order to do the right thing by consumers and added 2012 was a critical year for the life, pensions and insurance industries.

In his speech, titled The City, Insurance and Society: Why 2012 Could Redefine our Industry, Mr Thoresen said the financial crisis of 2008 was the current generation’s Wall Street Crash.

He said it was the industry’s role to accept the reality that had resulted from the crisis and to deal with what he called the “new normal”.

He said: Twenty twelve was always going to be a critical year, with Solvency II, the retail distribution review, and the creation of the Financial Conduct Authority. Our focus remains getting Solvency II over the finishing line, and we are working hard with the FSA for internal models to be agreed on time, while making reasonable requirements on data.”

Mr Thoresen said the creation of the FCA would be “a moment of truth for the UK financial services industry and the citizens of this country, 2012 will be the year when the debate settles and we see what kind of conduct regulation government has in mind for the UK.”

He said another challenge facing the industry remained both the improvement of financial understanding among the public and the gaining back of peoples’ trust.

Mr Thoresen said: “People are wondering if pension saving is really worth it. We must persuade people that it pays to save. And it pays to save with us.

“We must address the fiscal imbalance created by ageing that the OBR highlighted. And we have to start now. Our life and savings priority is to get pension reform off to a good start when the first stages of automatic enrolment begins in October.”

Ros Altmann, director general of Saga said the ABI must help consumers adjust the structure of pensions to be more like ‘lifetime savings accounts’

She said: “Otto Thoresen - is admitting that it would be better to use pension savings to pay back student debts, rather than locking young people’s money away in a pension that can’t be touched for decades.

“The ‘pensions or nothing’ policy is going to leave too many with nothing.”

Daruis McDermott, managing director of London-based Chelsea Financial Services said: “Mr Thoresen has been at the forefront of RDR but what we still need is clear guidance from the regulators.”