New ABI chief tells FSA: 'Only focus on risks that matter'

The ABI's new director general Kerrie Kelly has urged the FSA to be open-minded and balanced about its judgements on the likely dangers posed to consumers and on what consumers actually want.

She also told the regulator ABI members need to see regulator involvement is "proportionate".

"Whether it is the culture of Arrow visits to relatively small insurers, or the attention that is paid to matters such as financial promotions, our members need to see that FSA involvement is proportionate to the risk posed to consumers and shareholders," she told the FSA Insurance Sector Conference.

Kelly also cautioned against the regulator's over-zealous use of its powers.

"It is important that if granted the extended redress powers proposed in the Financial Services Bill, the FSA will exercise these powers only when there is strong evidence justifying its use, avoiding retrospective changes to the standards firms are judged by."

She said the ABI needs to continue to work closely with the FSA to ensure its role is "enhanced without it becoming, in effect, a shadow director".

"If the FSA is taking a greater role in approving non-executive directors, these judgements have to be exercised by appropriately senior staff and respectful of the right of shareholders to ultimately decide who serves on boards," she said.

She urged the FSA to keep the lines of communication between the two bodies open.

"The industry has worked very closely with the FSA [or RDR], and there are still key judgements to get right around simplified advice, adviser charging and increased professionalism.

"We want to continue to have a relationship with the FSA where we can be trusted partners on shared objectives with our opinions taken seriously."

Elsewhere she warned UK competitiveness is under threat from Government tax rules.

British tax rules mean the country is looking significantly less attractive as a place to operate a capital-intensive business.

"It is also a key issue within Europe where the domestic levels of corporation tax and tax treatment of foreign profits is a significant factor for our members.

"Given that the insurance industry is the fourth largest contributor of corporation tax to the government coffers - worth £8.2bn in 2008/9 - that is an issue that should concern any government."