Has Aon been treated fairly?
Who exactly are we paying to smooth the path to business in far-flung locations? And more importantly, how much? Many brokers will be asking themselves those questions this week after Aon was handed a £5m fine by the FSA (see page 7). The Aon management team was quick to work with the international authorities to resolve the problem. But you can’t help but think that they are feeling a little hard done by.
“The use of third-party introductions is a tool that London brokers have employed for generations,” says Aon’s UK boss Peter Harmer, perhaps hinting that his company may have been unfairly singled out.
But leave aside the punishment for a moment and let’s look again at the crime. The first question has to be, how do you prevent such an event? Aon was expected to know how much of its payment a foreign introducer was kicking back to clients to secure a bulk of work. Is that possible? And if the sums involved had been huge, wouldn’t the Aon risk management radar be blinking very brightly?
Many national brokers, including Aon, are overhauling their systems in the wake of this fine and it is expected that many will be forced to scale back their ambitions in specific regions in order to stay out of trouble. As Harmer adds: “Do I know for certain that other firms have problems with their risk management systems? No I don’t. Do I expect other firms are likely to have problems? Yes, absolutely.”
If the regulator moves to attack age-old industry practices without much warning, compliance will become increasingly important. But perhaps we shouldn’t feel too sorry for companies that get caught out. Maybe we all need to realise that the credit crisis has changed everything – there is no more business as usual.
Norwich Union’s big year
Nearly 18 months into the job, Igal Mayer has steadied the Norwich Union ship. He has talked tough to consolidators and he knows that pressure on investments has heightened the importance of underwriting discipline. So far, Mayer has been judged on this change in tack, but how does he plan to take the business forward as it becomes Aviva? He’s not giving away too much, but turn to page 20 to find out more.