'Appropriate action' threatened for non-compliant firms

The FSA is to crack down on brokers that are failing to ensure the compliance of their appointed representatives (ARs).

FSA director of small firms Stephen Bland said its 'arrow' visits had uncovered shortcomings in how principal firms were working with ARs.

"We have found that [firms] are not always properly controlling their appointed representatives," he told Insurance Times. "Firms are not always checking that ARs are fully compliant."

A fact-sheet has been issued to the market giving examples of good practice.

Alison Hewitt, head of department for the FSA retail firms division, warned: "Our emphasis at this stage is to help networks improve and the fact-sheet is designed to improve this.

"However, we will be carrying out further work this year to monitor the position and will take appropriate action where concerns remain."

The FSA said there were concerns that networks were taking a "lighter touch" approach to supervision of ARs to attract new members. It added that firms doing this were exposing themselves to a variety of risks.

Bland said: "The control is often not happening. Firms must do more to meet their responsibilities to customers."

Unpopular 'arrow' visits under the microscope
The FSA has begun a review of its 'arrow' visit system.

The review will consider the views of insurers and brokers following a damning survey conducted by law firm Beachcroft Wansbroughs last year.

The FSA was slammed for its failure to give feedback following visits to firms.

'Arrow' visits are used by the FSA to assess the risk that regulated firms pose to their statutory objectives.

The FSA said the aim of the review was to create "a better measure of the risks to the FSA's objectives that applies more universally, and consistently, to resourcing risk-based work".