Deloitte criticised for starting legal proceedings against motor brokers

Biba has lashed out at Deloitte, the liquidator of collapsed Drake Insurance, after it emerged Deloitte had started legal proceedings against a number of motor brokers.

Peter Staddon, Biba's head of technical services, criticised Deloitte's handling of the collapse. He said: "With Independent, [the liquidator] Dan Schwarzmann played with a very straight bat and sorted out a deal with brokers. That never happened with Drake.

"It was kept very quiet and Deloitte didn't approach Biba, while Dan Schwarzmann worked with the market."

Deloitte began contacting Drake's motor brokers for unpaid time-on-risk premiums and the return of commissions earlier this year. Those brokers refusing to pay up now face legal proceedings.

Joint liquidator Jamie Smith said: "We are talking and issuing proceedings against a couple of brokers and are talking to a couple of others about paying.

"We started the proceedings to clarify the legal stance on this."

It is unclear how much Deloitte is expecting to claw back from brokers, but the final bill could stretch to hundreds of thousands of pounds.

Staddon warned brokers facing litigation to seek legal advice. He added: "This is one of the major problems with insurers telling brokers what to do with the money that by definition belongs to the broker and not the insurer.

"Brokers should be seeking to ensure that the actual amount of money the liquidator is asking for is correct as there could be situations where the accounts could be incorrect."

It is undecided whether the cash collected by Deloitte will be used to directly reimburse clients or whether the money will be used to fund the Financial Services Compensation Scheme.