The FCA has published a report of the findings from its thematic review of conflicts of interest and intermediary remuneration in commercial insurance intermediaries (TR14/9).

The FCA found that:

• inherent conflicts within insurance intermediaries are not being properly managed.

• In some firms, the control framework and management information (MI) have not developed at the same pace as business models;

• the structure of some intermediaries’ businesses and their sources of revenue created significant conflicts of interest, particularly

• where firms or groups fulfilled multiple roles in the distribution chain and
• acted as agent for both the customer and insurer in the same transaction; and

• few SME customers understood it was possible that their insurance intermediary may be conflicted.

The FCA is concerned that if conflicts are not properly managed, there is a risk that decisions are made in the interests of firms rather than their SME customers.

As a result of its findings, the FCA is engaging with the firms involved in the review to address specific issues identified and also engaging proactively with the industry to enhance understanding of the findings, the rules and the FCA’s expectations, via industry forums and trade bodies.

Copies of the report are available. http://www.fca.org.uk/static/documents/thematic-reviews/tr14-09.pdf