Provincial brokers have threatened to boycott Lloyd's brokers who fail to produce terms of business agreements (Tobas).
The managing director of one regional broker branded the situation at Lloyd's as "chaos" and said a significant number of Tobas had not been received from the Lloyd's brokers.
The broker said: "It's important that I know whether I have risk transfer or not. I don't know what the situation is. If I go bust, will the Lloyd's broker honour the policy? I don't know what my relationship is with the Lloyd's brokers."
As revealed by Insurance Times (News 13 January), many Lloyd's brokers and insurers failed to sign up to a last-minute agreement on Lloyd's Tobas, leaving confusion over the handling of client monies.
The Broker Network chief executive Grant Ellis said: "We are in a period of limbo. Regional brokers are getting frustrated. If the situation continues, brokers should cease dealing [with Lloyd's brokers who do not produce Tobas]."
The compliance director of another regional broker agreed: "The uncertainty puts a great burden on us. We are less likely to use a Lloyd's broker if we don't know how we are to handle the money."
Biba regulation and compliance manager Steve White warned the FSA would look unfavourably on brokers without Tobas from their Lloyd's brokers. "The FSA is uneasy about unwritten trading agreements. It is expecting these agreements to be formalised."
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