The Association of British Insurers has called for better coordination between the industry, government and regulator when it comes to policing the insurance industry in the wake of the debacle caused by the botched announcement of a major regulatory investigation.
In letters to chancellor George Osborne and Financial Conduct Authority chairman John Griffith-Jones, ABI chairman Tidjane Thiam (pictured) and director general Otto Thoresen respectively said a collaborative approach the best way of driving change in the market.
The letters, published by the Treasury Committee ahead of an evidence session this morning (8 April) with Mr Thoresen, were written in the wake of the major losses suffered by insurers after an FCA director revealed details of a major probe in a private briefing with The Telegraph.
Listed life insurers shed billions in the wake of the report, which was later watered down by the FCA in an official statement more than six hours after markets opened.
This was the second time in two weeks the sector had been hammered by markets that were sent into a tailspin after Budget changes last month to the way retirees take an income, which over the course of an hour resulted in the value of annuity providers falling by a combined £3.2bn.
Providers have also recently had to deal with the government’s announcement of a charge cap on auto-enrolment pension schemes, to be introduced from April 2015.
The two identical letters said a more collaborative apporach “has a much greater chance of success than a situation in which different parties are pulling in different directions”.
They added: “The industry would also welcome a higher level and longer-term dialogue with the government and regulators on savings policy. With so many initiatives and changes in our market, it is more important than ever to have joined up policy making.
“The example of Solvency 2 shows how much better things work when the industry, regulator and government work hand in hand.”
Clashes between the regulator, ABI and government have been prominent in the fallout of the now-infamous article in which FCA director Clive Adamson intimated the regulator would review approximately 30m closed insurance policies.
The Financial Times reported on 4 April that the ABI was “confidentially told in broad terms” about the review “well before” the Telegraph article was published.
However, the ABI told FTAdviser that although the regulator had mentioned that Mr Adamson was giving the paper a briefing, they were not told that he would divulge such a level of detail.
An ABI spokesperson added it had a scheduled meeting with the FCA to discuss the detail of the business plan on the morning of Friday 28 March, after Mr Adamson’s inaccurate description of the nature of the probe had been published.
The ABI’s letter was dated 1 April, following closely on outraged calls from four of its largest members for the resignation of FCA chief executive Martin Wheatley.
Following the story in the Telegraph, the FCA said it would launch an internal investigation involving an unnamed law firm.
A contrite Mr Wheatley soon thereafter admitted he will face “serious questions” over the course of the investigation.
In their letters, Mr Thiam and Mr Thoresen said the FCA should not be allowed to investigate itself.
They wrote: “This is very much a situation in which even the perception of a lack of objectivity or thoroughness could be damaging to the FCA and its aims.”
