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FSA calls for greater financial protection for consumers

31 December 2004
The Financial Services Authority (FSA) says the introduction of new regulations for UK insurance firms will provide consumers with greater protection.

The regulations, which come into force today, require firms to take an integrated view of the risks that they face as insurers and how much capital they should hold against them.

The capital insurers hold will be more closely matched to the risks that they write and they will be better able to meet the commitments they have made to their policyholders.

David Strachan, the FSA's sector leader for insurance said: "The new capital requirements lie at the very heart of the FSA's reform programme for UK insurers.

"The introduction of the new requirements marks the culmination of extensive work by the FSA, insurance companies and their trade bodies. They place much greater emphasis on the need for all insurers to analyse their businesses and hold capital in line with their analysis."

The new regulations are part of the Tiner review of 2001, which has delivered a number of key reforms to help consumers, including increased transparency in the management of with-profits funds, and greater emphasis on the board of insurance companies for ensuring that with-profits funds treat policyholders fairly.

The final element of the review, due to be put in place in summer 2005, will address issues such as charges levied on those leaving with-profits funds early, target ranges for payouts and the closure of open funds. They will also provide consumers with more accessible information on how their with-profits fund is being managed.

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