I'm all for abit of clarity when it comes to the differences between the main political parties and often feel that the cosy language of recent years has blurred key policy disagreements. Look back over the history of British politics throughout the 19th and most of the 20th centuries and you will find a genre of political invective that makes your eyes water. So, perhaps we ought to thank Shadow Chancellor Ed Balls for donning the mantle of attack dog in Labour's otherwise rather tame and muted front bench team. He does, however, seem to be developing an unfortunate talent for going over the top in the rhetorical stakes.

This week's final decision from the European Court of Justice to accept the preliminary opinion of its Advocate General, Juliane Kokott, on ending the opt-out insurance has from the relevant European non-discrimination directives is not a surprise. We knew last October that this was very likely to be the outcome and that probably accounts for why much of the reaction from the insurance industry seems more like resigned indignation rather than outright horror. Indeed, it has been coming for the best part of a quarter of a century since the old Equal Opportunities Commission took Friends Provident to court over the higher premiums charged to women for medical and income replacement insurance.

The decision is a mixed bag. It is easy to see why the strongest reaction has come from the life assurance and retirement planning sectors because there it does seem to defy logic but only if viewed from a narrow actuarial perspective. Women live longer: that is a simple, indisputable statement. So, why should financial products where longevity is a key risk factor not set different rates for men and for women? The ECJ has decided to frame the answer to this question in a political and social context, effectively nullifying the rather obvious actuarial answer.

The response to the debate therefore has to focus on the effect that inequalities in annuity rates have on the propensity of women to save for retirement. Fought on this ground the industry has very little chance of persuading the UK government to take a stand against the ECJ ruling as far too low a proportion of women save adequately - or at all - for their retirement and removing anything that can be viewed as an impediment to tackling this crucial problem is going to be welcomed by policymakers.

When it comes to general insurance, especially motor insurance, the industry is on even shakier ground.

There has been a longstanding and widespread suspicion that the use of gender as a major rating factor is a lazy proxy for many other things that the insurance industry could rate on if it really wanted to. Are women really that much "safer" as drivers merely because they are women? I doubt it and so to many other people, including the Belgium consumers' association that took the case to the ECJ. Their lower accident and claims rates have much to do with the amount of time they spend in a car and how far they drive. This takes us into the arena of pay-as-you-drive policies which you can, using modern telematics, easily implement, also rating by average speeds, type of roads driven on and the times of day the driver uses their car. These are altogether more sophisticated measures and will, after a period of adjustment, lead to a much more accurate pricing model.

This is not to understate the problems that the insurance industry and consumers will have in adjusting to the new regime. There is already a widespread suspicion among consumers that insurers will just use this as an excuse to put up premiums. The problem for insurers is that this judgement has arrived at a bad time. They are losing money on motor insurance and we are therefore moving into a hardening market: rates will be going up anyway. I think the insurance industry will just have to take this backlash on the chin.

What has surprised me is how little we have heard so far from the anti-European political lobby. I thought after the recent grandstanding over rejecting the European Court of Human Rights ruling on giving prisoners the right to vote, that the anti-European forces might see the ECJ ruling as an opportunity to pick another fight with a European institution. But, so far, there has been hardly a peep.

It seems that anti-European Labour and Tory MPs see more benefit to them in opposing rights for prisoners than they do in being seen to go into battle on behalf of the insurance and savings industry. That is a very sad commentary on the standing of insurance and financial services in the world of politics today.

That said, if any sort of political lobby driven by opponents of the broader European project should emerge I would urge caution on the industry before embracing it. The European Union makes most of the rules that affect the industry so to attempt to do battle with it on an issue where the industry case is not as solid as the knee-jerk reactions might make it appear would not be a wise move, especially if the only political allies you can find are really just using it as a convenient issue with which to attack the EU and pursue an agenda that is only heading into a dead-end. 

Our first post-war coalition government has now lasted 100 days; not a great achievement in itself but a convenient moment at which to pause and consider its impact on the financial services sector.

I thought it would provide an interesting perspective to look at what has been done by considering impact that the Liberal Democrats have had on policy in this area. After all, the only real alternative to the Conservative/Liberal Democrat coalition following May's General Election was a minority Conservative administration. This would have been unstable and would have be looking to create a suitable opportunity to call a fresh election later this year or early in 2011 to drive for an overall majority. This would have made it rather more cautious in a couple of crucial areas.

The first would have been overall economic policy where I think it is inconceivable that a minority Tory government would have proposed such a drastic programme of public expenditure cuts, as much as it may have wanted to. It is only the security of the coalition's majority and the prospect of not having to face the electorate for five years that has instilled the confidence in George Osborne and the Treasury team to announce a high risk strategy of spending cuts. They are prepared to run the risk of a stalling recovery because they believe the economy will come out of the other side much stronger and know they have the time to wait for the hoped for benefits to become manifest.

The second policy area where I think we would have seen a more cautious approach applied is pensions. The backlash to the various announcements about raising the retirement age and abolishing barriers to working longer has been sadly predictable and is not something a government constantly looking over its shoulder at the opinion polls would have risked provoking.

Beyond that, most of the rest of what we have seen so far in the way of policies for the financial services sector would have been much the same.

The reform of the regulatory structure looked initially as if it might be strongly influenced by the Liberal Democrats but, after some debate within the coalition we have seen the Conservative manifesto proposals rolled out virtually unchanged. The Financial Services Authority is going and its responsibilities split between the Bank of England and a new Consumer Protection and Markets Agency, coupled with a clearer focus on financial crime. The Liberal Democrats were dismissive of calls to restructure the delivery of regulation, preferring to stress the need for more effective management if systemic risk within the existing structure. They would have retained the FSA.

Action to get the banks lending and to rein in remuneration has largely reflected the promises and rhetoric of the Conservative election campaign. They may not be as keen as their coalition partners on shaking up the banks but they know full well that they cannot afford to be seen to be soft on them. This is one area, however, where policy could take a more distinctively Liberal Democrat turn over the next few months. The Treasury is currently consulting on the proposal to impose a levy on the banks and Vince Cable's Department of Business, Innovation and Skills published a wide-ranging consultative document - Financing a Private Sector Recovery -  just before the recess containing some quite radical proposals to force banks to lend more to businesses. The more fundamental battle over the structure of the UK banking sector, with the possible separation of retail and investment banking (favoured by Cable and the Lib Dems), has been temporarily postponed with the creation of the Independent Commission on Banking to review this area but it will force its way back onto the policy agenda next year.

The final policy that merits a mention is the decision to press ahead with compensating the policyholders of the failed Equitable Life. In opposition both the Conservatives and Liberal Democrats were highly critical of the Labour government's steadfast refusal to bring this long running saga to a conclusion and both included pledges to act quickly in their manifestos. The recent proposals to set in train a process of compensation would have happened with or without the coalition.

 Apart from banking reform, there are relatively few significant policy differences between the Conservatives and Liberal Democrats in financial services so we are not likely to see many battles here which threaten the stability of the coalition. Those battles will be fought elsewhere as the full implications of the depth of the public expenditure cuts dawns and as the process of electoral and political reform begins to gain some real momentum.

The meeting of the All Party Parliamentary Group on Insurance & Financial Services earlier this week with Tim Jones and his colleagues from the Personal Accounts Delivery Authority was quietly reassuring.
Mr Jones's commonsense and practical approach to the huge challenge he faces in getting the whole Personal Accounts regime up and running in a pretty tight timescale certainly impressed those MPs and Peers who have a clear understanding of the issues and were involved in shaping the legislation that created Personal Accounts. He also showed a skilfull, light touch in dealing with the more politically charged contributions, mainly from those who lament the passing of the era of generous final salary pension schemes.
A more detailed summary of the proceedings has been prepared by the group's technical consultants Price WaterhouseCoopers.
APPG - note of meeting _PADA_ 201009.pdf