Boisseau: new controls on non-execs will make it tough

ellen bennett Groupama Insurance chief executive Francois Xavier Boisseau has hit out at the FSA for imposing stringent controls on the appointment of non-executive directors, saying that between the regulator and the board, managers will struggle to retain control of their companies.

Boisseau spoke to Insurance Times as the focus on the regulation of financial services in Europe and the US reached new heights, with President Obama pushing for a landmark overhaul of regulation, and the European Commission hammering out a new cross-border framework.

He was referring to moves by the authority to increase the role of non-executive directors, and to take a more active hand in vetting them before their appointment.

Currently, the FSA has to approve non-executives, but tends to do so after seeing a simple form. Recently, it has said it will start interviewing would-be appointees in person.

Boisseau said this would place an unfair burden on insurers, and he was concerned about the growing role of non-executives. “It is going to be very, very difficult for the management to actually manage.”

He said he also feared the FSA would abandon proportionate regulation following the banking crisis, thus increasing the regulatory burden on smaller companies.

In a speech delivered at the ABI’s biennial conference earlier this month, FSA chairman Lord Turner said there was “no need for a revolution” in the regulation of insurance companies, noting that they differed from banks “in the much lower importance of liquidity risks, which have played such a central role in the current banking crisis”.

However he said there would have to be major changes, and that the FSA would take a much stronger stance in future: “There can be no return to light touch regulation and supervision . . . to supervision on the cheap.”

In a speech delivered to the Association of Corporate Treasurers in May, FSA chief executive Hector Sants said: “The FSA has introduced interviews for candidates for a number of the key functions in an authorised firm. The presumption is that any application submitted by a high-impact firm for the roles of chair, chief executive, finance director or risk director will result in an interview.”