The Financial Services Authority today sets out proposed changes to its ‘Permitted Links’ rules that govern which assets the £650 billion unit-linked insurance sector can invest in.
The current Permitted Links rules have been in place for 13 years and they have not kept up to date with market changes since then.
The FSA will replace them with a more principles-based set of rules which will allow investment in a wider range of assets while maintaining current levels of consumer protection. To do this the FSA will put in place a set of high level rules for unit-linked insurance funds which will be underpinned by some more detail rules on specific assets.
Dan Waters, FSA Director Retail Policy and Asset Management Sector Leader, said:
“The current Permitted Links rules are out of date, inflexible and difficult for firms and for the FSA to interpret. Our proposals aim to take away unnecessary detail, and replace it with more principle-based high level rules. This is a practical expression of the FSA's stated aim of moving towards More Principles-Based Regulation and should give the firms affected greater flexibility in investing whilst maintaining the appropriate level of consumer protection.”
The proposed reforms fulfil a commitment in the FSA Business Plan 2006/07 to review the permitted links rules. Following publication of a Policy Statement this summer the new Permitted Links rules are expected to come into effect in the autumn.
