The Financial Conduct Authority has launched a consultation that will run until 2nd July on proposals to streamline insurance market regulation. The watchdog said the move came on the back of its stated intention to remove outdated guidance, to reduce the regulatory burden on businesses and to improve outcomes for consumers.

Matt Brewis, director of insurance at the FCA, said: “We are stripping back our insurance rulebook by removing ineffective, outdated or duplicated regulation, as part of our drive to become a smarter regulator and support growth.

“We have listened to industry and we are taking action - in doing so we will reduce regulatory costs and increase the competitiveness of the already world-leading UK insurance sector, while maintaining vital protections for smaller customers.”

Ash Daniells, legal director at law firm Kennedys, commented: “The proposed changes aim to reduce regulatory complexity and give insurers greater flexibility, particularly when serving sophisticated or commercial clients. Whilst it will mean fewer prescriptive rules for insurers, they will also face greater scrutiny if their interpretation of ‘fair outcomes’ is challenged by the FCA.

“It is positive to see a shift to a more flexible, principles-based approach, however it will also create uncertainty, particularly for smaller or mid-sized firms lacking sufficient compliance resources.”