Contentious proposals have been changed or softened, says Andy Cook

On Monday, the general insurance regulator published its revised proposals for regulating brokers and other intermediaries. And it was a document that showed that the FSA has been listening and that brokers have mounted a successful lobby.

One of the most contentious proposals contained in the previous draft (CP160) has been abandoned. The FSA had proposed that small businesses be treated like private individuals. That meant taking a lot of the risk and, therefore, providing disproportionately large amounts of advice.

Now the FSA has said that brokers can treat small businesses as commercial customers and so caveat emptor prevails. Only private customers will be classified as retail customers.]

Another major change is that critical illness and private medical products will not be subject to a separate regime specially tailored for high risk products. Instead, brokers will be asked to assess risks for themselves. So, the FSA says, any significant and unusual exclusions must be disclosed. This means that brokers will still have to tell customers clearly what medical conditions and types of illnesses are excluded from cover.

However, this does not take away the problem of travel cover, where travel industry agents will continue to sell cover, including medical insurance, without being regulated to these standards.

There are still issues outstanding, including that of risk transfer, but the good news is that the FSA is listening. And what's more, the FSA is acting rather less like the Gestapo (as one broker recently called it) and more like the UNO.