But be aware, warns chief executive, stricter measures will mean you lose business

London market brokers were frantically reviewing their corruption and bribery controls after the FSA handed Aon a record £5.25m fine late last week.

In an interview with Insurance Times, Peter Harmer, Aon UK’s chief executive, defended his firm’s record and said it was now losing business in emerging economies because of the strict anti-corruption measures it had introduced after the fine was levied.

He said the broker’s rivals would soon be forced to follow its lead as the FSA took a tougher line on financial crime.

Toby Esser, chief executive of Cooper Gay, said his company was double-checking risk management controls. “Our guys in risk management are making sure we have everything in place. When something like this comes out, you have to make sure you are 100%.”

Eric Galbraith, chief executive of Biba, urged the market to respond to the fine.

“Many brokers will have systems and controls in place and will now be revising them – that’s what the FSA has been encouraging … The market has to make a stand on these things.”

The regulator fined Aon for failing to ensure that payments made to third-party introducers in countries such as Indonesia and Bangladesh were not then handed on as bribes to win business. The “suspicious payments” to overseas firms and individuals reached $7m (£4.8m) over five years from 2002.

The firm is conducting an internal investigation into the payments, which could result in action against UK staff.

The irregularities were brought to Aon’s attention in 2007 by the US regulator, which had in turn been contacted by the Indonesian regulator. The inquiry prompted Aon to examine its anti-corruption controls and review all third-party payments. They were investigated by its legal adviser Freshfields.

Aon reported the problems to the FSA itself, and kept it informed of the review. The FSA reduced Aon’s fine by 30% in recognition of its co-operation.

Harmer said Aon had introduced a global anti-corruption policy, which included refusing to deal with third-party introducers in territories with a high risk of corruption (see box on previous page).

“Aon is potentially at a disadvantage because we have severed a number of relationships that have moved to other brokers. We are not able to participate [in deals] in certain parts of the world because we cannot get comfortable with the third parties used. But I think the playing field will level out very, very quickly.

“Do I expect other firms to have problems? Yes, absolutely.”

Asked whether Aon would take action against members of staff involved in the payments, he said: “It is inappropriate for me to comment specifically because a process is under way now. Remedial action will be taken as required … We won’t avoid taking tough action.”

The FSA is conducting a thematic review of corruption and bribery among commercial insurance brokers, and will report back later this year with examples of good and bad practice. Further fines are likely.

Margaret Cole, the FSA’s director of enforcement, said £5.25m was the largest financial crime-related fine imposed by the FSA. “It sends a clear message to the UK financial services industry that it is unacceptable for firms to conduct business overseas without having in place appropriate anti-bribery and corruption systems and controls,” she said.

“The FSA will continue to take robust action.”

The regulator wrote to commercial brokers in November 2007 reminding them of their obligations regarding corruption.

In October 2008, it wrote to a number of London market brokers saying it wanted to take a closer look at their controls as part of its review of anti-corruption measures.