Insurance intermediaries fail to keep track of customers’ money, according to the FSA

The Financial Services Authority (FSA) in the UK is to undertake a review later this year into the handling of client money by general insurance intermediaries. This decision follows pilot work that showed a worrying level of failure by both wholesale and retail intermediaries to comply with FSA rules on client money, which would potentially put consumers at risk of financial loss.

Common problems identified through the pilot studies included failure by firms to: perform a client money calculation or of doing so incorrectly, keep track of money held at third parties, observe trust law and thereby potentially jeopardise trust account status, inform customers of how their money is being handled.

On the basis of the findings, a number of firms have already been referred to enforcement for potential breaches of client money rules and inability or unwillingness to take