The General Insurance Standards Council is in a race with the Financial Services Authority to win responsibility for regulating long-term health insurance products.
Critical illness and long-term care insurance lie outside the scope of both regulatory bodies, although the Treasury is currently reviewing the situation.
Chris Woodburn, chief executive of the fledgling GISC, which has 375 members, sparked the race by promising to act in the interests of the consumer if the statutory financial regulator or Treasury failed to step in.
A GISC spokeswoman commented: “Chris Woodburn said that if the FSA is not disposed to bring these products under its remit, he would ask the GISC board to decide if it is an appropriate role for them.”
But she said the GISC's membership – and hence its self-regulatory scope is limited to general insurance by the 1982 Insurance Companies Act and this would have to change.
A spokesman for the FSA said it would regulate long-term and critical illness insurance if given the job by the Treasury. But he added: “It is down to the Treasury to make this judgment.”