FSA ready to visit brokers to enforce rules
Brokers face the prospect of visits from the FSA as it begins further investigations into how the insurance industry is managing potential conflicts of interest.
The move is the next stage in the regulator 's efforts to assess whether brokers have appropriate mechanisms to deal with situations that may lead to a conflict of interest,such as the payment of volume overriders and profit commissions by insurers.
An FSA spokesman said the work would involve analysis of the information already supplied by brokers,but added that he could not rule out direct contact with firms.Brokers were required to inform the FSA by 20 January of the systems they had in place to handle conflicts.
Biba 's regulation and compliance manager Steve White said brokers must be able to justify the responses they had given to the FSA.
Last month,Insurance Times reported there was serious apathy among brokers over the issue of conflicts of interest (News,19 January).
Only 20%of brokers contacted by the magazine said they had responded to the regulator's deadline.
The FSA has warned brokers that it could make full commission disclosure compulsory if it is not satisfied
with the industry 's performance.
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Retail client money findings
The FSA is expected to publish in the spring its findings on whether retail brokers are failing to comply with client money rules.
The regulator began investigations into the retail sector in September.This followed its examination of the
wholesale market 's handling of client money which revealed wide-spread non-compliance.
Problems included firms whose client money accounts were in deficit or without the correct trust status,as well as failures to
perform regular and timely calculations.
The client money rules are some of the most complex of the FSA 's regime.
Compliance experts suggested the FSA was likely to find similar problems among retail brokers as it found in
the wholesale sector.