Elliot Lane advocates a sensible approach - and less of the jargon and bureaucracy

' One commentator this week quoted US investor Warren Buffett when discussing Gordon Brown's economic legacy.

The Sage of Omaha's observation was this: "It's only when the tide goes out that you can see who's swimming naked."

The same could be said of much of the insurance and broking fraternity post-Katrina and the back-pedalling being made in this cycle.

But talk of a major probe into the solvency ratios of insurers has been overplayed, according to sources close to the FSA.

The problem lies in the confusing and vague principles which the regulator calls treating customers fairly (TCF). No other policy from Canary Wharf has caused so much anger and frustration.

Guidance is appreciated by the industry but it must not be prescriptive because then both customer and company suffer.

Judging from a speech delivered by the FSA's newly-returned Sarah Wilson two weeks ago, the emphasis seems to be on focusing the products, and not letting the buyer walk in blind.

She said: "We cannot expect caveat emptor to apply if customers are presented with products not designed for them and/or if products and their risks are not clearly explained to them."

Fair enough, but if the script entails 20 minutes of verbosity, the consumers, who are even more fickle than ever before, are sure to vote with their feet.

The thinking inside the ABI is that suggestions in the Hampton Review, published earlier this year offering sensible views on the effectiveness of UK regulation as a whole, should be adhered to at the FSA.

The review suggested a 'dumb-bell' approach to regulation.

At one end there are the major issues affecting the whole industry, driven by the major players and government.

At the other is the practical understanding that the regulator will have to administer punishment and so create rules to keep errant companies in line.

Connecting both of these are those companies and guiding principles which fall in between, namely the ones that are prudent, competent and just get on with the job.

This is the approach the FSA needs to try to reach.

Worryingly, Sir David Arculus of the Better Regulation Taskforce believes a "regulator of the regulator" is needed to, ironically, cut Brussels bureaucracy.

When the tide finally retreats, there is a good chance that all that will be left is a pile of red tape. IT