Is this Fuel Filter Safe ?

[Bright Eyes]

Someone told me that the current fuel filter I had was incorrect. I have a Racor R 12 T filter with the plastic bowl. It is mounted under our settee near the fuel tank. (see pic below). It is used for my diesel engine, Yanmar 3GM30.

They said that the plastic bowl was a fire hazard in its current position and that this model was meant for outboard moters. They also said it would fail a Coast Guard inspection. They recommened I get the Racor 500 Fuel Filter.

So is this correct? or how can I find out. I plan to have the Coast Guard do their complimentary check in a month but I'd like to have things right the first time.

Thanks