In the ABI response to Treasury requests for feedback on regulatory reform, he said that the new regulatory system must be good for customers.

He said: “We support the Government’s efforts to reform the regulatory system, but would urge that they keep a focus on fixing the causes of the financial crisis and do not get distracted by the symptoms. Over regulation or excessive intervention will not help customers and could make it difficult for them to access the products they want and need.

“We want the move to a twin peaks system to work, but hope it will be very clear who is responsible for decisions across the two bodies as duplication or confusion will add unnecessary cost to customers.

“As we focus on the UK regulatory framework we must make sure we have a strong voice in Europe, as Europe is increasingly setting the regulatory agenda for UK businesses and their customers and we need to make sure the new regulators help in that process.”

The ABI has welcomed the Government's proposals for reforming financial regulation, but we have a number of major concerns about how the system will operate:

•        The proposed timetable is very ambitious, particularly as the financial sector is dealing with a number of other significant regulatory changes simultaneously. There is, therefore, a capacity issue with both firms and regulatory authorities being very stretched.

•        It is imperative that the two new regulators coordinate their work and communicate well with each other or that overlap and confusion will run throughout the system making it more difficult for insurers to deliver for customers

•        The UK authorities need to do more to influence EU rules as the European Supervisory Authorities (ESAs) are becoming the main source of detailed regulatory requirements for UK financial services firms. This can be addressed when selecting UK representatives on the ESAs and, more generally, in the recruitment of staff to the UK regulatory bodies, the setting of work priorities and allocation of resources, and by working with the industry to agree a common UK position.

•        In addition, to deliver the best outcomes for consumers, we believe the Bill can be strengthened by placing a specific requirement on the FCA to increase access to financial products. The FCA should strive for positive outcomes such as well-functioning markets and consumers accessing products that meet their personal financial needs.

•        The FCA should focus on effective, proactive and consistent supervision and enforcement of the existing requirements on firms to treat customers fairly rather than getting involved in designing or approving financial products.

•        We support the Financial Ombudsman Service (FOS) in its important role as an independent and free service for resolving individual disputes.  However, the respective responsibilities of the FCA, FOS and the courts should be set out in statute.  For example, novel points of law should be referred to the courts and broader regulatory matters determined by the FCA. In addition, new measures are needed to ensure that the FOS is properly transparent and accountable.