Lord Hunt says we should be encouraged by the FSA's intention to move away from prescriptive rules
Critics of regulation often complain it is a sledgehammer used to crack a nut. This is especially the case, it is suggested, in general insurance, where onerous rules have been introduced to rectify problems that arguably never existed.
Perhaps the FSA accepts it has been over-zealous in its approach. Maybe this is why it is about to embark on an assessment of the effectiveness of its activities in the general insurance arena.
What is certain is that general insurance has never been plagued by the sort of widespread mis-selling practices that made rigorous and intrusive regulation of financial services an inevitability.
The insurance industry should add whatever momentum it can to attempt to introduce lighter touch regulation. Anything which reduces the cost burden on insurers and intermediaries and streamlines the buying process for consumers is to be welcomed.
In recent weeks the ABI has highlighted the negative impact of regulation, pointing out how people are deterred from shopping around because of the extended compliance routines that companies are obliged to perform. If we don't tackle the problem, the market could gradually be regulated out of business.
We should be encouraged by the FSA's stated intention to continue moving away from prescriptive rules towards a principles-based approach. This suggests the regulator has confidence in the market's ability to interpret and act upon its overall expectations.
In other words, the FSA seems to be sanctioning an increasing degree of self-regulation - and that must be positive.
The industry's ongoing campaign to promote professionalism has surely played a major role in changing the tenor of regulation.
The more professional we become, the less regulation will be required from above because we will effectively be doing the job ourselves.
As professionals, members of the CII are committed to the acquisition of qualifications, continued professional development and adherence to a Code of Ethics and Conduct.
We believe in competence, integrity and transparency - all the qualities that regulation is designed to promote.
We should not be shy about extolling our virtues. It has always been the case, in both insurance and financial services, that the vast majority of ethical, customer-oriented practitioners have suffered due to the poor behaviour of the unscrupulous few.
By promulgating the virtues of professionalism, we can enable customers to discriminate between advisers.
As professionalism takes root, we will create a virtuous circle: the quality of recruits we attract will rise, in turn making our sector even more professional in outlook and performance. We will earn even greater levels of respect and trust, reducing the need for regulation and enhancing our standing with consumers.
It will not be an overnight process, but now is the time for us to swim with the FSA tide by grasping the nettle of self-regulation. IT
' Lord Hunt is chairman of the financial services division of law firm, Beachcroft Wansbroughs, and chair of the CII Professional Standards Board
