Examination of witnesses (Questions 260
THURSDAY 15 FEBRUARY 2001
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.
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 toand I hope we are
going toimprove the information available to policyholders,
I do not think that would be the way you would do it.
Chairman: Thank you very much indeed.