UK CAA don't approve most of an Operations Manual. They do approve (or not!) the FTL, the MEL, and one or two other items. They only "have sight of" the rest of it.
This means that, if they don't like something, they can apply pressure to get it changed (but the operator can "negotiate" to keep it, or can simply prove that their own interpretation of the relevant rules is reasonable).
Whether or not the operator accepts the changes the CAA ask for / require, if something goes wrong, the CAA will never be liable as they haven't approved anything (other than the items mentioned in the first para above).
The text concerning whether to divert (which appears pretty much direct from the JAR template for writing an Ops Manual) does indeed leave the bulk of the decision to the common sense and airmanship of the captain, in consultation of course, with the rest of his flight crew.