Chancellor Gordon Brown made a major commitment to cut back on regulation last week by promising to implement the recommendations of the Hampton Report in full.
The report, from J Sainsbury chairman Philip Hampton, outlined the need for a more risk-based approach to regulation. Thus firms or industries with good compliance records will be subject to less stringent regulation than those deemed to pose a risk.
The FSA's John Tiner said of the report: "Where we have discretion, we aim to intervene only where we identify a market failure and where our intervention is likely to make things better."
The government claims that introducing Hampton's recommendations will mean around 1 million fewer inspections, and a 25% reduction in the total number of forms regulators send out.
The number of regulators that businesses have to deal with will also be reduced from 31 to seven over the next two to four years.
Stephen Timms, Financial Secretary to the Treasury, told Insurance Times: "The Chancellor's response to the Hampton Review is a recognition that we need to bear down on the regulatory burden and reduce bureaucracy."