FSA sets up a reporting system designed to reduce the level of financial crime in the insurance industry...
The Financial Services Authority (FSA) has set up a reporting system designed to reduce the level of financial crime in the insurance industry.
Under the new system insurance firms and intermediaries are being called on to inform the FSA when they suspect criminal behaviour, so that the FSA can decide whether to investigate further. This may arise when an insurer terminates an agency agreement with an intermediary where they see doubtful practice or suspect misconduct. It may also arise where an insurance intermediary has concerns about another intermediary they do business with.
Examples of possible financial crime involving insurance fraud include: misappropriation of client money or money held under risk transfer agreements; failure to pass on premiums, refunds or claims; falsifying customer details to obtain insurance business that would otherwise be turned down or be more expensive; and issuing false cover notes or false certificates of insurance.
Urging all insurers to participate in the scheme, Stephen Bland, director of small firms at the FSA, said: “We want to know when a firm has suspicion or evidence of malpractice so that we can act on it where appropriate. We hope that by sharing intelligence in this way, we can work together to reduce financial crime.”
Nick Starling, director of general insurance and health, at the Association of British Insurers, welcomed the FSA announcement. “I would urge insurers to continue to support the FSA in tackling financial crime,” he added, “and report criminal activity they become aware of.”
Voicing BIBA support for the scheme, Eric Galbraith, BIBA chief executive, said: “Financial crime is detrimental to the entire industry and it is the responsibility of all of us to work together to eradicate the problem and to ensure that consumers are protected against its consequences.”
