Biba's concerns over risk transfer monies not accepted by insurers
Efforts to create a new trust account for brokers handling no client money have stalled because of lack of support from insurers.
ABI head of market regulation Chris Hannant said: "There doesn't seem to be any appetite from the market. The majority of members do not feel it is a problem."
In February, it emerged that insurers, the ABI and Biba were attempting to develop a single trust account for
brokers handling only insurers - risk transfer - monies. AXA has been at the forefront of looking for a solution.
The issue arose because if a broker holds only risk transfer money, FSA client money rules do not apply. Brokers must therefore hold the money in non-FSA accounts, which may not protect the money.
Royal & SunAlliance FSMA programme director Blyth Morris said: "We are comfortable with what we [R&SA] have done. We have said that money must be held in a trust account for our benefit."
But he added: "It would be helpful to have a single trust account [for insurer-only monies]. It would be complicated for brokers to have multiple accounts. But if the ABI doesn't come up with a rapid solution all insurers will have done their own thing."
But the ABI has put the work on hold. Hannant said: "We are undertaking research on brokers' responses to [insurers'] solutions that have been set up."
Biba regulation and compliance manager said Steve White said: "The old GISC trust accounts no longer have trust status. If a broker held money in these accounts and went bust, the money would not be protected. Biba has raised this issue, but only AXA has taken this on."
AXA head of broker development Colin Calder expressed frustration that other insurers had not followed its lead on the matter.
