Industry warns against regulatory substitution

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The Financial Services Authority must not be allowed to place pressure on organisations to produce industry guidance as a substitute for regulation, the Association of British Insurers has warned.

Its comments follow proposals from the FSA recommending it gives confirmation to guidance issued by trade and professional bodies in order to provide a “sturdy breakwater” to firms and reassure them they are meeting the regulator’s requirements. In its response to the FSA discussion paper, the ABI says industry guidance should supplement FSA rules, rather than replace them, and any move towards high-level rules should stand up on its own merits and not depend on the existence of industry guidance. But it raises concerns about “mixed signals” from the regulator, stating: “However, on r...

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