Life offices were particularly concerned at the SIB's desire to see a majority of public interest representatives on the PIA board. Insurers said this had never been the Government's intention; it would bring an end to self-regulation and raise problems of accountability.
Others were unclear what measures the SIB wants the PIA to take. Ron Calver, general manager at Norwich Union, said: 'It's easy to talk about raising standards and getting tougher. But what are the actions that generate that outcome suddenly?'
Gary Heath, chief executive of the National Federation of Independent Financial Advisers, said the SIB's suggestion of the introduction of a pounds 10,000 capital requirement would 'wipe out between 50 and 60 per cent' of the mainly small firms of advisers that belong to Fimbra. Mr Heath said the SIB's late intervention was 'a stab in the back for poor Gordon Downey', chairman of both Fimbra and the PIA.
The SIB set out what it wants to see from the PIA in a letter to Sir Gordon from Andrew Large, who took over as SIB chairman last June. Mr Large is particularly concerned about the life industry's persistent problems - poor standards of selling, the high number of policies surrendered early, and rising investor compensation claims.
Mr Calver said Mr Large's letter could be seen as 'a vote of no confidence in the boards of Lautro (the present life office regulator) and Fimbra'. He questioned whether Lautro or Fimbra had failed, and added: 'The weakest regulator in terms of practical influence and monitoring is Sibro. It is the only one which does not seem to have criticised anybody or disciplined anybody.' He said he would like to have confidence that the banks and building societies regulated directly by Sibro had so few faults.
Others involved in forming the PIA question the SIB's understanding of retail financial markets, pointing out that senior SIB staff mostly come from an institutional background. This view was not challenged by the appointment yesterday of John Young, chief executive of the Securities and Futures Authority, as the SIB's chief executive, a new position.Reuse content