The challenge for the new Financial Conduct Authority (FCA) will be to regulate in a way that promotes and produces better outcomes for the public, says the Chartered Insurance Institute (CII).

Following today’s launch of the Financial Services Authority’s (FSA) paper Journey to the FCA, David Thomson, director of policy and public affairs at the CII, said that while there is no doubt that the new FCA will be a tough, pre-emptive and interventionist regulator, the FCA must avoid increasing the complexity of regulation for the industry.

In a statement, Thomson said: "We welcome the new regulator’s emphasis on placing culture and behaviour at the heart of the new regulatory approach. The CII has been calling for some time for the regulatory system to take greater account of the behaviour of firms as well as individuals. We look forward to seeing how the FCA will not only identify and punish poor and unethical behaviour but also encourage firms’ intentions to go beyond mere compliance with initiatives like the CII’s Corporate Chartered title and Aldermanbury Declaration initiatives, which aspire to promote higher standards to the public.

“But the proof will be in how this is exercised, and whether the ends for the public will justify what may appear to some as draconian means. The FCA must develop its approach flexibly to take into account other sectors than banking – and have a proper risk-based approach based on measures that reflect the public interest."

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