The Financial Services Authority (FSA) has just published a consultation paper which proposes to radically reform the rules firms need follow when selling general insurance.

The FSA says that the move comes as part of its efforts to implement more principle-based regulation - and claims that a differentiated approach to insurance conduct of business lies behind the proposals.

For general insurance business such as household, motor or pet policies, this will mean that high-level rules and principles will govern future transactions - except in cases where detailed provisions are required by European Union Directives.

The FSA is also proposing to implement a few additional rules which will be "carefully targeted" to improve selling practices in "areas where consumers are losing out".

"Following our recent radical overhaul of the investment conduct of business rules, today's announcement is another big step towards more principles-based regulation," Dan Waters, FSA director of Retail Policy, said.

"All the evidence suggests that consumer detriment varies a lot according to the type of insurance product involved. And it is right we should now move to a differentiated and principles-based regime for general insurance where the focus is on outcomes for consumers rather than processes within firms."