Following a US enquiry into Aon, Marsh and Willis, the FSA is set to consider PSA review
The FSA confirmed this week that it is considering a review of its policy on placement service agreements (PSAs). The move will happen once the Spitzer enquiry into the use of such agreements reaches its conclusion.
PSAs are deals between brokers and underwriters whereby brokers receive extra fees in exchange for producing premium volumes to underwriters.
New York State Attorney General Eliot Spitzer has launched a probe into the use of PSAs by Aon, Marsh and Willis.
Spitzer began his investigation following allegations that the use of PSAs encourages brokers to steer clients to insurers that would profit the broker rather than the client.
An FSA spokesman said: "We know there are volume overriders and profit-sharing arrangements but our analysis is that there is insufficient customer dissatisfaction to justify banning them.
But the spokesman added that the FSA would be monitoring the Spitzer enquiry and "may want to consider reviewing our policy on PSAs", depending on the outcome.
Aon, Marsh and Willis have confirmed they received subpoenas from the New York attorney general's office. The three brokers said they would co-operate with the enquiry.
Last month, Lloyd's said it had launched an investigation into the use of PSAs after concerns were raise about their use in the market.
Hardy Underwriting chairman Peter Hardy has expressed his concern about the use of PSAs.
"The incidence of so-called placement service agreements is worrying and we are hopeful that the public controversy arising currently in the US will serve to make them less attractive in the UK," Hardy said.
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