The International Underwriting Association it to canvass its membership over the plans by the UK regulators to scrap its obligation to take a global view of London’s position as a risk centre.
It warned London’s competitiveness as a financial centre is in danger of being ignored under plans for a new regulatory structure in the UK, given the fact that in the past part of the Financial Services Authority’s (FSA) remit has been to consider the City’s role as an international hub for financial services.
But this obligation has been scrapped in government proposals to share industry regulation between the Bank of England and two new bodies: thePrudential Regulatory Authority (PRA) and the Financial Conduct Authority (FCA).
Nick Lowe, the IUA’s Director of Government Affairs, said: “Overall the emphasis of proposals outlined by HM Treasury are on preventing financial crises and managing systemic risk. This is, of course, a vitally important objective, but it is disappointing that there appears to be no consideration given to maintaining London’s pre-eminent position in the international financial services sector.
“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 centres around the world.”
Elsewhere the Treasury consultation paper ‘A new approach to financial regulation’ outlines how the PRA will be the main regulator for insurers including wholesale insurance business, but the FCA will also have a part to play.
“Our member companies are still concerned about the possibility of duplication of regulation with two separate supervisory bodies,” added Mr Lowe. “We will have to consider how these two authorities operate in practice, but clearly there must be close cooperation between the regulators.
“I am also pleased to see that government recognises insurance is different from banking and poses less of a systemic risk, though it would be fairer to say that any risks to the economy from insurance are not systemic.”