PIA brushes off opposition: Insurers' objections to public interest representatives ignored

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THE NEW investor protection body, the Personal Investment Authority, yesterday ignored opposition from top life insurers and appointed two public interest representatives to its board.

The PIA brought onto the board Sir John Bailey, former Treasury solicitor, and Sir Terry Heiser, former permanent secretary at the Department of Environment, both of whom will serve as representatives of the public interest.

The PIA also reaffirmed a target of having a board on which active practitioners from the investment industry will no longer have a majority - a decision that led Standard Life to withdraw its support from the PIA last week.

The nine professionals will be matched by nine public interest directors, together with Colette Bowe, the chief executive, who counts as a representative of the PIA itself and not as an industry practitioner.

Last week Jim Stretton, deputy managing director of Standard Life, resigned from the PIA board on the grounds that with only nine out of 19 industry members it would not be a self-regulatory body.

Both Standard Life and Prudential have called for legislation to impose statutory regulation rather than what they regard as an unworkable hybrid, and a number of other life assurance companies have been sympathetic to their views. But the Government is not.

Although board members said there was no open disagreement at yesterday's meeting - because Mr Stretton, the opponent of the strategy, had quit - next week's meeting could be much tougher.

One of the industry representatives will have to resign and two further public interest directors will have to be appointed to meet the PIA's target.

There is no agreement on which industry representative will be asked to leave and insiders described the decision as tricky, so there may not be an announcement next week. One industry seat that could be under threat is Ann Nevitt, from a friendly society.

The Securities and Investments Board, the senior financial regulator, said last year it expected a majority of public interest directors on the PIA board. This criterion will not be met but the PIA is hoping to persuade Andrew Large, SIB's director, to see this in the context of the composition of the board and the new body's prospectus, which is due to be published next month.

One complication in assessing the PIA board is that Joe Palmer, the chairman, is a public interest director but was chief executive of Legal and General and chairman of the Association of British Insurers.