BAT joins the ranks of PIA's critics: New financial regulator comes under fresh fire over its governance and board structure

BAT Industries, which owns the insurance companies Allied Dunbar and Eagle Star, has joined the ranks of critics of the Personal Investment Authority, the new financial regulator that published its prospectus yesterday.

George Greener, chief executive of BAT's UK financial services business, is concerned about the PIA's governance and board structure - the same issue that prompted Standard Life to withdraw its support last month.

Unlike Standard Life, Mr Greener wants to see a board consisting solely of public interest representatives and the PIA's chief executive. Input from the industry would be relegated to an executive committee.

An Allied Dunbar spokesman said: 'The right kind of PIA is achievable but not with this prospectus. The PIA is running a serious risk of failure. Companies cannot be coerced to join and a lot of major players are of the mind that statutory regulation could not be more disadvantageous than the growing rule books of the (existing) regulators.'

Halifax Building Society was also lukewarm. Arthur Selman, assistant general manager for financial services strategy, said Halifax would be looking for 'the meat in the sandwich'. He said: 'Is this a 'step change' (in standards) or are we just shuffling the deck chairs around?

'Fine words are no substitute for a specific agenda. What would worry us is if this were more of the same old compromises - doing what you need to do to keep as many people as possible from being too unhappy.'

The PIA aims to enforce 'really high standards of professional competence and integrity'. Joe Palmer, its chairman, said the PIA's vetting of the financial advisers, life insurers, unit trust companies and others who form its 6,000 potential members would be crucial. 'It will be tough but fair. It will embody the PIA's standards,' he said.

The PIA's 70 admissions staff hope to process all applications in time for the new body to assume its powers in July. The Securities and Investments Board, the senior financial regulator, announced yesterday that it was 'minded to recognise' the PIA as the main regulator for retail investment markets.

It intends to de-recognise Fimbra and Lautro, the existing regulators, because its believes fragmentation should be eliminated to achieve higher standards.