The FSA has moved to reassure firms about caveat emptor, saying reports of its demise have been exaggerated.
Speaking at the International Insurance Society conference in London this week, FSA sector leader for insurance David Strachan said treating customers fairly does not equate to the end of caveat emptor. Neither does it mean that policyholder returns have to outstrip market performance or that all firms have to offer the same level of service.
Strachan also highlighted Myners' review of mutual life insurance firms, underlining its importance and recommending it to delegates.
He said one key issue of the review is how to get people to engage in businesses they co-own, which he said is no easy task.
Strachan went on to say that ratings agencies, which have previously been considered more influential than regulators, are starting to lose some of their influence as the industry moves towards a more risk-sensitive capital regime He pointed to a future with less regulatory presence, saying that once FSA reforms have been accepted, its presence will start to recede.
He said: “Admittedly, to date, our presence has been an obvious one in the insurance industry and this is largely because, since its inception, the FSA has been foc-used on addressing the imperfections of the regime that we inherited and delivering a regime that meets the realities of today's market.
“Once the reforms have bedded in and a steady state emerges, our presence will recede to some degree.”