The Financial Services Authority (FSA) has said general rules governing the handling of clients' medical information by advisers are sufficient after concerns were raised by a provider.
The regulator said its rules do not specifically cover advisers' roles in submitting applications for protection insurance, but are focussed on consumer outcomes, which it said provided adequate safeguards.
It follows concerns raised by a provider earlier this year in a letter to the regulator.
The unnamed provider said most advisers were "not trained or competent" at handling medical information supplied by clients.
It said in-house research it had conducted suggested almost 70% of protection applications completed by advisers had some missing information.
In a fifth (21%) of applications completed for life cover and critical illness insurance, the provider said the missing information had led to a different underwriting decision.
"This ongoing inadequacy is already discrediting the insurance industry and has the potential to discredit the pensions industry, with dire effects for the government," the letter, seen by IFAonline sister title, Cover, read.
But the FSA said it felt its rules achieved "an appropriate degree of protection" for consumers.
A written reply to the provider, signed by Sheila Nicoll, read: "FSA rules and principles generally focus on outcomes which must be achieved for customers rather than explicitly prescribing how firms should undertake certain activities".
Nicoll added consumers could seek redress from the firm, or ultimately approach the Financial Ombudsman Service, if they felt they had suffered detriment as a result of poor practice.
In March next year, the Consumer Insurance Act 2012 will come into force.
The new law will permit ‘honest misrepresentations' to be made by consumers in insurance applications.
Previously, the consumer was required to disclose all medical information, and the new law, regulators hope, will give more prominence on the questions asked and answers given.
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