Regulatory Austerity Hindering Growth, Legal & General to Say

U.K. and European regulators are hindering economic growth through “regulatory austerity,” according to Legal & General Group Plc, the biggest investor in the British stock market.

Rules that force insurers to hold extra capital, prevent gender-based pricing and require mark-to-market accounting are stopping firms from investing for the long term, according to an advance copy of Chief Executive Officer Nigel Wilson’s lecture at London’s Insurance Institute tonight.

“There is regulation which helps deliver growth and regulation which hinders it,” Wilson, 56, is expected to say. “There is little point, to my mind, of creating regulatory austerity and calling it resilience.”

The Financial Stability Board, an international panel of regulators that set global standards, plans to determine which insurers are too big to fail in April before stricter supervision is enacted. Insurers, including London-based Legal & General, say they weren’t responsible for and survived the financial crisis well, in contrast to banks, meaning they shouldn’t be subject to tougher regulation and capital requirements.

The U.K. economy shrank in the fourth quarter of last year, raising the specter of an unprecedented triple-dip recession. Wilson is expected to say the prospect of new rules is preventing Legal & General from making more long-term investments that would boost growth.

“We have a desperate need for growth but we face what I call the ‘triangle of austerity’ -- fiscal austerity as government tries to balance the books, bank austerity as balance sheets are shrunk and regulatory austerity as macro-prudential policy bears down on risk,” Wilson will say.