Kane warns of sector 'sleepwalking' to fate

Published on Tuesday 9 June 2009 21:35

ONE of Scotland's most senior financial services figures warned yesterday that the industry would "be sleepwalking into trouble " if it failed to recognise that confidence in the sector and its regulation has been "severely knocked".

Archie Kane, chairman of the Association of British Insurers (ABI), admitted confidence had also been eroded "in the products we provide", but also warned that there was a danger of regulatory over-reaction.

Kane, speaking at the ABI conference in London, said: "I am concerned that some may not realise the population at large have lost faith in the financial services sector as a whole. To ignore this is to sleepwalk into trouble."

Kane, who is also group executive director, Insurance and Scotland, for Lloyds Banking Group, said it was important to rebuild confidence.

He admitted that financial companies had made mistakes, and regulators had failed to keep pace with the increasingly complex products and firms they supervised.

However, he argued that delivering a more robust regulatory framework, "does not require revisiting every part of the rule book. Let's not throw the baby out with the bathwater".

But he added: "There is a real danger, in the current environment, of supervision turning into a parent/child relationship, resulting in individual supervisors and individual firms feeling unable to make their own judgements based on experience."