FCA found controls on commission risked corrupt payments
The FCA has fined broker Besso £315,000 for a failure to take reasonable care to establish and maintain effective systems and controls for countering the risks of bribery and corruption.
The regulator found that weak controls on sharing commissions with third parties gave rise to an unacceptable risk that they could be used for corrupt purposes.
FCA director of enforcement and financial crime Tracey McDermott said: “Despite receiving two visits from us, and numerous industry wide warnings, Besso failed to ensure that they had proper systems and controls in place to counter the risks of bribery and corruption in their business activities.”
Besso is the second broker to be fined by the FCA for unacceptably weak bribery and corruption controls. JLT was fined £1.8m for failing to have appropriate checks and controls against bribery and corruption when paying overseas third parties.
Besso’s rule breaches occurred between 14 January 2005 and 31 August 2011. The FCA found that Besso:
- had limited bribery and corruption policies and procedures in place between January 2005 and October 2009. It introduced written bribery and corruption policies and procedures in November 2009, but these were not adequate in their content or implementation;
- failed to conduct an adequate risk assessment of third parties before entering into business relationships;
- did not carry out adequate due diligence on third parties to evaluate the risks involved in doing business with them;
- failed to establish and record an adequate commercial rationale to support payments to third parties;
- failed to review its relationships with third parties, in sufficient detail and on a regular basis, to confirm that it was still appropriate to continue with the business relationship;
- did not adequately monitor its staff to ensure that each time it engaged a Third Party an adequate commercial rationale had been recorded and that sufficient due diligence had been carried out; and
- failed to maintain adequate records of the anti-bribery and corruption measures taken on its third party account files.
The fine would have been £450,000, but Besso received a 30% discount for settling early in the FCA’s investigation.
The broker pointed out that the FCA had not found that it authorised any bribes to third parties, and that the regulator recognised its subsequent efforts to improve its systems and controls framework.
“The FCA acknowledged that Besso is a medium sized broker in the wholesale insurance market whose business does not, overall, pose a high bribery and corruption risk,” it added.