UK: Anti-Bribery and Corruption in Commercial Insurance Broking

On 13 May 2010, the FSA published a report discussing how commercial insurance broker firms in the UK are addressing the risks of becoming involved in corrupt practices such as bribery. In particular, the report sets out the findings of the FSA's recent review of standards in managing the risk of illicit payments or inducements to, or on behalf of, third parties to obtain or retain business.

In its report base the FSA identifies a number of common concerns. These include:

  • Weak governance of anti-bribery and corruption efforts and a poor understanding of bribery and corruption risk among senior managers;
  • Failure to implement a risk-based approach to anti-bribery and corruption in practice;
  • Very weak due diligence on, and monitoring of, third party relationships and payments with a worrying lack of documentary evidence of due diligence taking place;
  • Very little or no specific training was provided on anti-bribery and corruption, even for staff in higher risk positions;
  • Although payment authorisation controls appeared generally adequate, virtually no firms took steps to identify unusual payments to third parties; and
  • Some firms awarded their brokers large bonuses directly related to the income or profit they generated. This could increase the risk of bribery and corruption, particularly where brokers use third parties to win business.

The FSA concludes by saying that broker firms have approached higher risk business involving third parties far too informally and many firms are still not operating at acceptable standards. The FSA believes that the serious weaknesses it has identified in some broker firms' systems and controls will lead to a significant risk of illicit payments or inducements being made to, or on behalf of, third parties to win business.

The FSA also believes that many firms are not in a position to demonstrate adequate procedures to prevent bribery - a defence to the new criminal offence in the Bribery Act 2010 of 'failing to prevent bribery'.

The FSA states that the report does not constitute nor should be treated as formal guidance but that it expects firms to consider the report's findings, to translate them into more effective assessment of this risk, and to implement and maintain more effective appropriate controls where necessary.

A copy of the report can be found at: http://www.fsa.gov.uk/pubs/anti_bribery.pdf

FSA Speech on Key Priorities in Regulation: Outlining the FSA's strategy

19 May 2010

The FSA has published a speech by Ken Hogg, director of the FSA Insurance Sector. The speech outlines the FSA's key strategic priorities in regulating the insurance sector:

Intensive and Integrated Supervision

  • The FSA is taking a more intensive supervisory approach in all areas of its work: challenging firms' judgements more critically; monitoring markets more closely and intervening earlier when it identifies risks.
  • The FSA is also focusing on the sustainability of firms' business models, taking an in-depth look at things like business strategies and consumer value propositions, profitability and capital and investment returns and risk appetite.

Protecting Consumers

  • The FSA has launched a new conduct strategy that seeks to understand how firms make money and whether, in doing so, they pose any risk to consumers.
  • To achieve this, the FSA is developing and delivering a regulatory approach that looks more deeply into the value chain and the product life cycle, into product scrutiny around governance, design and oversight by provider firms.
  • The FSA will test what outcomes consumers experience from products sold and is keen to identify products which appear to be sold for the benefit of the firm rather than the consumer.

Shaping European and International Financial Regulation

  • The FSA has supported the development of a modern EU regulatory standard for insurance from the very beginning. From a capital perspective, the aim of Solvency II is not to seek excessive prudence; rather it is to ensure that firms' hold the right amount of capital.
  • There is a fifth Quantitative Impact Study (QIS) in August. This is the final QIS before Solvency II goes live and will incorporate both quantitative and qualitative elements, and at both the solo and group level. QIS5 represents the last significant opportunity to test the likely impact of the proposed requirements on firms.

A copy of the speech can be found at: http://www.fsa.gov.uk/pages/Library/Communication/Speeches/2010/0519_kh.shtml

Client Money and Asset Report Letter – follow up

20 May 2010

The FSA published a 'Dear CEO' letter on the 19 January 2010 concerning firms' handling of client money and assets, highlighting FSA principle 10 that 'a firm must arrange adequate protection for clients' assets when it is responsible for them'. A client money & asset report was enclosed with the letter and the FSA urged firms to consider the report and confirm that they were in compliance with their obligations regarding the protection of client money and assets.

On 20 May 2010, the FSA published a follow up letter. Firms are asked to confirm the following to the FSA by email:

  • That they have properly considered the content of the letter dated 19 January 2010 and its accompanying report;
  • That the firm is in compliance with its obligations in respect of client money and assets; and
  • The name and contact details of the person in the firm who has overall responsibility for the firm's compliance with the FSA's client money and assets requirements in CASS.

If firms fail to respond by 30 June 2010, they may be subject to follow-up action by the FSA, including enforcement action against both the firm and individuals.

The follow-up letter can be accessed via the following hyperlink: http://www.fsa.gov.uk/pubs/ceo/20may2010.pdf

FSA Temporary Rule giving Recent PPI Complainants Longer to Refer Complaints to the Financial Ombudsman Service

28 May 2010

The FSA has announced a temporary rule to give customers who recently made a complaint about their Payment Protection Insurance (PPI) policy more time in which to refer their complaint to the Financial Ombudsman Service (Ombudsman). The temporary rule runs from 28 May 2010 until 27 October 2010 and applies to complainants who have already been sent a final response from a firm between 28 November 2009 and 28 April 2010.

A copy of the press release can be found at: http://www.fsa.gov.uk/Pages/Library/Communication/PR/2010/087.shtml

FSA Consolidated Policy Statement (PS 10/7) on fee-raising arrangements and regulatory fees and levies 2010/11 including feedback on CP10/5

28 May 2010

On 28 May 2010, the FSA published Policy Statement PS 10/7, following two phases of an annual consultation on fees. This Policy Statement reports on the main issues arising from CP10/5, which gave consultation proposals on FSA and FOS fees and levies, and CP09/26, which covered proposed policy changes to the fee and levy regimes.

The Policy Statement:

  • Summarises the FSA's policy on its fee-raising powers under the Financial Services and Markets Act 2000 (FSMA);
  • Gives an overview of its fees rules;
  • Details the final 2010/11 FSA periodic fees;
  • Reports on the FOS general levy consulted on in CP10/5 Regulatory fees and levies – Rates proposals 2010/11 (February 2010); and
  • Feeds back on further responses to the strategic review proposals contained in Part 1 of CP09/26 Regulatory fees and levies – policy proposals 2010/11(November 2010) not already reported on through CP10/5 above.

The FSA finalises the two main proposals it consulted on in CP09/26 into its fee rates calculation for 2010/11. These are for most 'A' fee-block firms:

  • Introducing a new minimum fee for firms, which is aimed at recovering minimum specified regulatory costs; and
  • Moving to a straight line recovery of costs allocated to fee-blocks to calculate variable periodic fees that most firms pay above the minimum fee.

The impact on the 2010/11 fees for firms in the 14 subsets of the 'A' fee-block, compared to 2009/10 may be substantial. Overall, 40% of firms will see an increase and 60% will see a decrease in their fees. These fees account for over 90% of the FSA's annual funding requirements. These firms will also be affected by the final changes to the FOS levies. Firms in other fee-blocks must note the final 2010/11 fee changes that will also concern them.

Fee payers will be invoiced from June 2010 for their 2010/11 periodic fees.

A copy of the Policy Statement can be viewed at: http://www.fsa.gov.uk/pubs/policy/ps10_07.pdf

Europe

European Commission

Getting implementation of Solvency II right by Michel Barnier

4 May 2010

On 4 May 2010, Michel Barnier, the European Commissioner responsible for the internal market and services, delivered the opening address at the public hearing on Solvency II in Brussels. The purpose of the conference was to invite input from industry on the implementation of Solvency II. In his speech, Barnier outlined the overall aim of Solvency II as well as its core objectives.

A transcript of the speech can be found at: http://ec.europa.eu/commission_2010-2014/barnier/docs/speeches/20100504/20100504_speech_en.pdf

Payment Protection Insurance: Competition Commission confirms case for point-of-sale prohibition

14 May 2010

The Competition Commission has issued a press release stating that it has provisionally decided that consumers will benefit from the introduction of a point-of-sale prohibition for all forms of payment protection insurance (PPI), with the exception of retail PPI.

The point-of-sale prohibition would stop the completion of sales of PPI during the sale of the associated credit product such as a personal loan. It was one of a package of measures the Competition Commission planned to introduce following its investigation into PPI, which concluded that businesses that offer PPI alongside credit face little or no competition when selling PPI to their credit customers. Following detailed analysis by the Competition Commission of the likely effects of such a prohibition, the Competition Commission has concluded that the benefits of a prohibition outweigh the disadvantages.

The exception is retail PPI, where it is not clear whether the advantages of introducing the prohibition alongside other measures would outweigh the disadvantages. The Competition Commission is inviting comments on whether alternative remedies would be more effective or would deliver equivalent benefits at less cost.

Comments on the draft decision are invited by 4 June 2010. The full text of the press release can be found at: http://www.competitioncommission.org.uk/press_rel/2010/may/PPI_remittal_press_notice.pdf

CEIOPS

CEIOPS Annual Report for 2009 and Work Programme for 2010

27 May 2010

The Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) has published its Annual Report 2009 and Work Programme for 2010.

The document provides a comprehensive overview of CEIOPS achievements in 2009, including its work with the other Level 3 committees, and provides an outline of CEIOPS objectives for the current year.

A copy of the Report can be viewed at: http://www.ceiops.eu/media/files/publications/annualreports/CEIOPS-Annual-Report-2009.pdf

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.