The UK Financial Services Authority is undertaking a full scale review this year of general insurance intermediaries after finding a number of firms were failing to comply with the rules, putting consumers at risk of financial loss.
The FSA found a worrying level of failure in an initial study by both wholesale and retail intermediaries to comply with FSA rules on client money, the money held by the broker on behalf of the insured. Common problems included a failure to: keep track of money held by third parties; perform client money calculations; observe trust law and inform customers of how their money is being handled.
Several firms are already being investigated for breaches of client money laws. Julian Adams, head of wholesale insurance firms said: We will consider taking enforcement action against any firm, where we see willful non-compliance or an inability to handle customers’ money in line with our requirements.
The review, which will involve visiting over 200 firms, will begin later this year.