The decision to abandon placement service agreements (PSAs) has been condemned by a leading UK broker.

Smart and Cook chief executive Paul Meehan said the impact of New York attorney general Eliot Spitzer's inquiries had been "vastly overblown".

"The companies that have American parents are writing contingent payments out of their models, but most UK companies are operating exactly as they were before," said Meehan.

He said that Marsh "throwing contingent commissions back to the insurers was a knee- jerk reaction".

"The fundamental trading model had been in place for 50 years and it was, in my view, a fair trading environment. If you look for evidence you can see that neither brokers nor insurers have made huge amounts of profit, and the client has had the benefit, so the model has worked.

He added: "Marsh has fundamentally undermined its ability to deliver to a lot of corporate clients.

"At the end of the day corporate clients have to pay more money. Where's the sense in that? The fees have to go up because Marsh isn't getting PSAs any more."

He concluded: "So who's losing? The client. And who's winning? The insurers."