Wholesale brokers' handling of client money and their management of binding authorities are two key areas that the FSA will be examining in 2005.

Speaking at the Insurance Times Making Money from SMEs conference, FSA head of wholesale insurance firms Julian Adams told delegates that the FSA would be scrutinising agency agreements to ensure "order and clarity".

"It reflects our intention to remove reliance on unwritten and implied agency terms and arrangements," he said.

On the management of binding authorities, Adam said the regulator would be carrying out a review of firms' management of binding authorities in the fourth quarter of 2005.

"Key risks here include the acceptance of risks that are outside the binder, continuing to bind risks after a facility has been closed, and the proper management of conflicts that are inherent in the operation of binding authorities."