Insurance firms taken to task by FSA
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The Financial Services Authority has written to the chief executives of major insurance brokers and investment firms after discovering failings in the way some firms handle clients’ money.
The regulator has written to insurance bosses with a report detailing FSA visits conducted last year which investigated how insurance firms deal with clients’ money and assets.
The FSA visits revealed a number of failings, including poor management oversight and control; lack of establishment of trust status for segregated accounts; unclear arrangements for the segregation and diversification of clients’ money; and incomplete or inaccurate records, accounts and reconciliations.
The visits also resulted two firms being referred to the FSA’s enforcement division and one firm’s assets being frozen.
Now the FSA is taking further action by writing chief executive officers and sending them a report of their findings.
The report also includes examples of how firms should meet FSA expectations in relation to compliance with its requirements.
More visits will be carried out this year, to assess how firms are adhering to the FSA’s objectives.
This is the second time the regulator has written to firms on this issue, after the last letter in March outlining the obligations to protect clients’ money and assets.
Sally Dewar, managing director of risk at the FSA, says: “The client asset rules are a key protection for consumers.
“It is simply unacceptable that firms are not ensuring that consumers get the appropriate protection.
“We have pointed out our concerns to firms and will be following up these concerns with further visits this year.”
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