This is despite the regulator cutting back on its on detailed insurance selling rules.
It has just published its new Insurance Conduct of Business sourcebook (ICOBS) - what is said to be "another important achievement" in the implementation of principles-based regulation.
In it, the regulator sets out the standards and requirements for general insurance firms on how they deal with their customers.
While this will mean more flexibility for firms, the FSA has stressed that it expects the same standards of conduct to hold in place, with essential consumer safeguards remaining.
"We have greatly simplified our rules in areas of general insurance markets where outcomes for consumers are generally good," said Dan Waters, FSA director of retail policy and themes. "In a few areas, however, like payment protection insurance (PPI), we have responded to continuing market failures and consumer detriment by introducing carefully targeted rules to help ensure that consumers achieve a fair deal."
For products such as household, motor, pet and private medical insurance, the emphasis is on high-level rules, except where detailed provisions are required by EU Directives or are the only practicable way to protect consumers.
The new rulebook targets additional rules at areas of consumer detriment, in particular improving selling practices for protection products (critical illness, income protection, term assurance and PPI).
There will also be a stronger framework of rules to back the regulator's drive to improve selling standards in PPI markets.
As well as oral disclosure, this includes increasing the existing cancellation period of 14 days to 30 days and a new rule requiring firms to establish that customers would be eligible to claim benefits.
The new general insurance regime will come into effect on 6 January 2008 with firms being allowed a six month transitional period for implementation. All firms are expected to meet the required standards by 6 July 2008.
