Top financial services experts say shifting to a principles-based approach to regulation could cause problems.
Yvonne Jones, a director at the U.S. Government Accountability Office, writes about the experts’ concerns in a report on a financial services regulation forum that the GAO organized in June.
Congress included a provision requiring the GAO to organize the forum in the Financial Services Regulatory Relief Act of 2006.
Participants included a 26 top financial services regulators and industry representatives. The representative for the insurance industry was Roger Ferguson, chairman of Swiss Re America Holding Corp., Armonk, N.Y.
Many U.S. actuaries, insurance regulators and life insurance company executives say the U.S. insurance regulators should adopt the same kind of principles-based approach to financial services regulation that the U.K Financial Services Authority adopted in 1997.
Instead of establishing detailed rules, “the FSA established 11 high-level principles that give firms the responsibility to decide how best to align their business objectives and processes with regulatory outcomes that have been specified,” Jones writes.