Brokers may fall foul of FSA's 'complex' classification policy
Biba has warned brokers of the complexities of the FSA's customer classification rules in the light of low compliance levels with product disclosure requirements.
Mystery shopping exercises by the FSA found that 55% of mortgage firms failed to provide key documents to clients, such as the initial disclosure and key facts documents. The FSA described the findings as "disappointing".
Biba regulation and compliance manager Steve White said the FSA could encounter similar problems in the general insurance market.
White said that although brokers were used to making some disclosures under GISC rules there were some disclosures, such as demands and needs statements, that were new.
He highlighted the FSA's customer classification rules as being particularly "complex".
These rules require brokers to differentiate between retail and commercial clients - which affects the way they deal with the client.
White said of the rules: "They determine who gets what, when and how [in terms of product information and other disclosures]."
He added that brokers were "struggling" with the timings of the disclosures.
