Select Committee on Treasury Minutes of Evidence

Examination of witnesses (Questions 260 - 264)



  260. Sir Howard, this is interesting because that is December 1998, and that is actually before the Financial Service Authority had actually taken over, that is in the final period of Government responsibility for this matter.
  (Sir Howard Davies) Yes.

  261. So was it the Government or the FSA which was threatened with judicial review?
  (Sir Howard Davies) Technically speaking, at that time, it would have been the Treasury, but I guess in the full knowledge that if it had gone ahead it would have gone ahead under the FSA since it was two weeks before the transfer.

  262. Just to be clear about those facts, in that context it would have been the Government which was threatened with judicial review over that particular issue? So we are clear about it, that is the case?
  (Sir Howard Davies) At that point, yes, that is true.

  263. My other point is about the role of the Government Actuary's Department which, so far as insurance is concerned, is going to be transferred into the Financial Services Authority. Do you not think after consideration of the issues which have been in front of the Committee this morning it might be wise to leave the Government Actuary's Department as it is, with a clear distinct role to offer advice on this matter to you rather than absorbing it into your own organisation?
  (Sir Howard Davies) Obviously I have considered that matter, Mr Cousins, but I think I would not reach that conclusion. Our view after looking at the matter carefully has been that we will be more efficient and more rapid in our responses if we can integrate the work of the actuaries more closely with the work of the supervisors. We will be able to look at statutory returns more promptly; issues which arise will be able to be picked up more rapidly and more flexibly than they have in the past where there has been this somewhat arm's length, rather stately, relationship between the advisers and the insurance supervisors. Also the rigours of the actuarial culture and actuarial analysis will be helpful to us within the FSA in other areas as well. One point we are particularly conscious of, which has come up particularly in Ms Mallaber's questions but in others as well, is the interaction between prudential supervision and conduct-of-business supervision for both of which of course we will now be responsible, and we think the availability to us in-house of this kind of actuarial advice will improve the quality of our work both on the prudential side and on the conduct-of-business side.

Mr Beard

  264. Is it not possible to make public the Actuary's report on each insurance company to increase the transparency in all these matters?
  (Sir Howard Davies) I think at this present time you would certainly not be able to do so. I am not sure, Mr Beard, that would be the route I would choose if I wanted to make better public information available to policyholders, because I fear it might fall at the fence Mr Cousins so effectively erected of saying, "These statutory returns are not really tailored for the individual policyholder." As things stand at the moment, the actuarial analysis is actuarial analysis of the 420 pages of the statutory returns, and this is not station bookstall material exactly, so if we were going to—and I hope we are going to—improve the information available to policyholders, I do not think that would be the way you would do it.

  Chairman: Thank you very much indeed.

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