Insurance Broker Compliance & The FCA

All insurance brokers must either be directly authorised by the FCA or become an Appointed Representative, with a Principle firm being responsible for all the compliance activity.

 

Many firms will be directly authorised and the FCA use the following (albeit not an exhaustive list) as part of their supervision process.

 

  • The FCA “Handbook” of rules and guidance
  • Firm Contact Centre and Supervisors
  • Workshops
  • Regular data returns to the FCA by firms
  • Thematic Visits
  • Desk based monitoring
  • Supervisory Visits
  • Enforcement action

Such authorisation brings an onerous corporate and individual responsibility, especially for its approved persons. But, let us be clear, Appointed Representative status is also subject to the same degree of regulation but is one step removed due to the interaction with the Principle firm

 

As can be expected, there is an incredibly detailed rule book over many thousands of pages. But, not everything is subject to detailed rules.

 

There is detailed FCA guidance on numerous matters, which whilst not rules based, the FCA expect firms to follow this guidance.

 

Then, there are Principles, these are not necessarily subject to the same level of detail, and in many cases give a guide, which means firms must make their own interpretation and act accordingly.

 

Finally, there are Expectations. This is a less detailed approach and looks at the wider picture of how a firm and its management behave, so it is not just about “ticking” the regulatory boxes, but much more culture and conduct driven.

 

Firms will need to have regular contact, not least that all authorised firms must report to the regulator every six months via an Electronic On line System, which enables the FCA to monitor firms.