FSA ring-fencing proposals threaten with-profits fund rescues

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Financial Services Authority (FSA) proposals on ring-fencing with-profit funds could spell the end for ‘white knight' rescues of distressed funds, market participants are warning.

The proposals, outlined in consultation paper CP12/13, would place new restrictions on with-profit funds, requiring an insurer to treat each fund on the books as a separate ring-fenced entity.

The consultation paper has also prompted criticism that the FSA is gold-plating Solvency II. The main focus of the consultation