The FSA has begun to crack down on non-compliant brokers.

Speaking at the conference, FSA acting director of small firms Stephen Bland said the regulator had already found cases of brokers who were not compliant with the rules, despite having promised this on their application forms.

He also said there had been instances of brokers pocketing premiums rather than placing cover with insurers.

"We will take a tough stance," warned Bland.

In his speech he outlined the main areas of supervision that the FSA would focus on in 2005 for retail firms.

These included a "rigorous" enforcement of the perimeter, appointed representative networks, product disclosure and claims and complaints handling.

On disclosure, Bland said the FSA was about to start a project looking at the use of demands and needs statements and policy summaries.

"They are over-long in cases, and others are too generic," he said.

In relation to claims and complaints handling, he said: "There have been allegations of poor practice, particularly when claims handling is outsourced."

Bland also said the FSA would be adding a section to its website dedicated to small firms.