UK regulator the Financial Services Authority is sending letters of warning to insurance brokers about how they deal with conflicts of interest, according to a report from the Financial Times.
The FSA took over regulation of the insurance industry in January and has rules and guidance on how to manage conflicts of interest arising from commissions paid by insurers to brokers for business.
Julian Adams, head of the FSA’s wholesale insurance department, told the Financial Times: The manner in which conflicts of interest are managed is an issue in which we shall continue to take a significant interest in during the course of our ongoing supervision of firms and of the market as a whole.
Conflicts of interest in insurance broking were highlighted when New York state attorney general Eliot Spitzer accused Marsh & McLennan of favoring insurers who paid higher commissions, at the expense of clients. The law firm Freshfields found no evidence to support the claim.