The FSA has begun to crack down on non-compliant brokers.
Speaking at the Biba conference, FSA acting director of small firms Stephen Bland said the regulator had already found cases of brokers who were not compliant with the rules, despite having said they would be on their application forms.
He also said that there were instances of brokers pocketing premiums rather than placing cover with insurers.
"We will take a tough stance," warned Bland.
In his speech he outlined the main areas supervision that the FSA would be focusing on in 2005 for retail firms. These included a "rigorous" enforcement of the perimeter, appointed representative networks, product disclosure and claims and complaint handling.
On disclosure, Bland said that the FSA was about to begin a project looking at the the use of demands and needs statements and policy summaries. "They are over-long in cases, others are too generic," he said.
In relation to claims and complaints handling, he said: "There have been allegations of poor practice, particularly when claims handling is outsourced."
He added that the FSA would be adding a section to its website dedicated to small firms.
