BRITAIN’S top insurer issued a stark warning to the industry yesterday that it must prepare itself for an increasingly intrusive approach from regulators.
Tidjane Thiam, chief executive of FTSE 100 giant Prudential, said insurers should expect a much tougher approach to regulation when the Financial Conduct Authority comes into existence on 1 April.
“The message coming from them – and we stay very close to them – is that we will see a more interventionist approach taken. We are also concerned about what they see as a mis-match between customer expectations and what our products deliver,” he told the Association of British Insurers’ motor conference.
“General insurance activities will be under scrutiny from the new regulator in a way they have never been in the past.”
The Financial Services Authority is being split into two organisations as part of a new twin-peaks model of regulation.
Thiam yesterday praised one part of the new system, saying the “pragmatic approach” of the Prudential Regulation Authority – tasked with ensuring major banks and insurers remain financially stable – should be welcomed.
But he said the approach of the Financial Conduct Authority – which will be concerned with the consumer-facing aspects of the financial sector – would result in a “marked change in culture from recent years”.
“We will only be successful in managing the new conduct regime if we provide real value for our customers,” he added.
Other industry figures have previously raised concerns about insurers falling between two stools when the new system is introduced, amid fears that the regulations were designed with banks in mind.
Last year the ABI’s director-general Otto Thoresen warned of the need to avoid a “predator-prey” relationship between the insurance industry and the new regulator.