ABI: Concern over rushed changes but good news on floods

ABI: Concern over rushed changes but good news on floods

ABI: Concern over rushed changes but good news on floods

The 2009 Queen’s Speech includes several issues in which the insurance industry and its customers have an interest.

Financial Services Bill
Maggie Craig, the ABI’s acting Director General, said:

“We understand the need to legislate on the agreements made at the G20 and EU. However, this Bill should not be a catch-all for the wrong type of regulation. We should be wary of the principle that the state should set an individual’s pay package, not the market.

“The changes to the FSA’s powers on consumer redress are of profound importance, and we are alarmed this is being rushed through without proper consultation with industry. This is too important not to get right. We are also worried over moves to court- based collective redress. Pushing the UK toward a US litigation culture would create costs for consumers and businesses that far outweigh the benefits.

“We support today’s announcement to improve consumer knowledge of financial services. Insurers have long worked to develop the public’s financial education.”

Long-Term Care

“It is regrettable that the Personal Care at Home Bill undermines the government’s own Social Care Green Paper, published as recently as July. That Green Paper set out a range of funding options for both at-home and residential care, but today’s announcement seems to undermine the funding options set out in it.

“The insurance industry wants to be part of the solution and deliver the best and most cost-effective long-term care. But this needs clarity and certainty from the government, which piecemeal polices do not provide. We urge the government to ensure that any new proposals include insurance industry involvement particularly as the government’s own Insurance Industry Working Group report recently advocated this sort of partnership.”

Flood and Water Management Bill
“Managing the UK’s rising flood threat better is crucial for the five million properties at risk of flooding. It is also essential to ensure that flood insurance remains widely available. We welcome this Bill which should represent an overhaul in flood management, which we have long campaigned for. Its progress into law should be a priority.”

Notes for Editors

1. The government’s ‘Reforming Financial Markets’ White Paper set out the issues around the current framework for dealing with widespread customer complaints and redress in financial services, with inadequate consultation.

. Consumer redress – measures include increasing the FSA’s powers to impose a past business review and payment of redress on firms without the need to seek approval from Treasury and Parliament

. Collective redress – enabling a representative to bring an action through the courts on behalf of a group of consumers

2. The proposals in the Green Paper allowed for private sector involvement with the private so-called ‘insurance’ funding model. A set proportion of both at-home and residential care costs would come from the state and individuals could purchase insurance policies to cover the additional costs. This required some elements of state disability benefits, for example Attendance Allowance, to be integrated.

The government’s proposals announced today would reduce the amount of benefits that could be integrated to fund the cost of residential care. Therefore the funding model for the Government’s Personal Care at Home Bill is inconsistent with funding model proposed in the Social Care Green Paper.

3. Enquiries to:
Jonathan French 020 7216 7392 (Mobile: 07958 330 480)
Malcolm Tarling 020 7216 7410 (Mobile: 07776 147 667)
Erfan Hussain 020 7216 7411 (Mobile: 07712 841 184)
Kelly Ostler-Coyle 020 7216 7415 (Mobile: 07968 364 302)

4.The ABI is the voice of the insurance and investment industry. Its members constitute over 90 per cent of the insurance market in the UK and 20 per cent across the EU. They control assets equivalent to a quarter of the UK’s capital. They are the risk managers of the UK’s economy and society. Through the ABI their voice is heard in Government and in public debate on insurance, savings and investment matters.

5.An ISDN line is available for broadcasts.

6.More news and information from the ABI is available on our web site, www.abi.org.uk