FSA chairman Callum McCarthy has hit out at a proposed EU initiative to end the use of gender based premiums in insurance.
In a speech to the Global Financial Leadership Forum, McCarthy said the initiative was likely to hinder the development of an efficient life and general insurance market.
McCarthy said the FSA had two main concerns about the initiative: “It is first a concern whether the wholly laudable aim of preventing gender discrimination can be practically achieved by a statement which overrides realities, and second whether the implications of what has been proposed have been thought through.
He said the proposals would force insurers, in some cases, to set insurance premiums that did not reflect a realistic assessment of risk.
“I very much hope that the government, which like the FSA is committed to cost benefit analysis of any regulatory initiative, will require this proposal to be closely examined. Regulation works best when it recognises, rather than overrides, reality,” said McCarthy.
ABI director general Mary Francis said McCarthy’s speech was a highly significant intervention in the debate.
Francis said: “The FSA's intervention in this debate is highly significant. The regulator is joining a growing consensus in the industry and outside which can see that these proposals would hurt many millions of customers.
“The FSA has to speak up for the consumer interest and for the good order of financial markets. On both counts, the Draft Directive in its unamended form would fail the test.
“We hope that discussions currently taking place amongst member state governments on the Directive will recognise the realities as confirmed by the FSA.
