Planned watchdog 'too bureaucratic'

PROPOSALS drawn up for the new body that will regulate the life insurance and savings industry drew immediate fire yesterday as being far too bureaucratic.

The report by Sir Brian Jenkins, a Coopers & Lybrand partner, recommends requiring insurers, financial advisers and other investment businesses regularly to report large amounts of management information to the Personal Investment Authority. The PIA is intended to take over the regulation of the retail savings markets from Fimbra and Lautro, the existing regulators.

Sir Brian suggested that financial companies regulated by the PIA should make quarterly reports. He set out 11 categories of 'continuing business measures', including income and numbers of customers and salesmen, and 10 potential problem indicators, such as cancelled policies and complaints.

Financial advisers and unit trust companies may have to submit business plans for the next three years to demonstrate that they will remain solvent, even if their income shrinks by 25 per cent.

Where the PIA was unsatisfied with the business plan, financial advisers and tied sales agents should be required to demonstrate capital of up to pounds 10,000, the report says.

Among industry bodies raising concern about the report, the British Insurance and Investment Brokers Assocation said it was worried that a significant increase in administrative and financial burdens would harm brokers and consumers.