The FCA is currently working with the seven large brokers reviewed - using appropriate regulatory tools

The FCA review into broker conflicts of interest could lead to significant fines, a compliant expert has warned.

In the thematic review published yesterday the FCA said that brokers were failing to manage conflicts of interest.

It concluded that in some firms, control frameworks and management information had not developed at the same pace as business models.

The regulator said it is now working with the seven large firms that were sampled using the full range of regulatory tools available.

Accounting firm Moore Stephens’s insurance industry group director Charles Portsmouth said these tools are likely to include enforcement fines.

He cited examples of past thematic reviews into add-ons and mobile phone insurance which were followed by fines.

In July 2013, Phones 4u broker Policy Administration Services (PAS) was fined £2.8m for poor complaints handling, while Swinton was hit with a £7.4m fine for mis-selling add-ons.

“Yesterday’s long anticipated thematic review may not have had many surprises, but it will alarm brokers, particularly those channelling business through managing general agency structures,” Portsmouth added.

“The FCA has expressed explicit concern about the quality of the advice SME’s are getting from their brokers and identified some pretty obvious areas where conflicts could arise.

“It could be a matter of months before we see brokers facing the consequences. Given their laundry list of concerns the FCA has identified, these fines could be significant.”