Firms ‘must do more’ to beat corruption

The FSA has warned commercial brokers to tighten their procedures against the risk of bribery and corruption, following a wide-ranging review.

The review was the result of an investigation into 17 firms last year. It found:

• Brokers are not approaching higher-risk business that involves third parties with sufficient care, and need to do more to cut the risk of becoming involved in bribery or corruption.

• Brokers’ due diligence on, and monitoring of, third-party relationships and payments is weak, leading to a significant risk of illicit payments or inducements being made to, or for, third parties to win business.

• Many brokers cannot demonstrate that they have adequate procedures in place to prevent bribery.

In January last year, the FSA fined Aon £5.25m following an investigation into anti-bribery and corruption controls at the broker’s businesses in countries such as Indonesia and Bangladesh. The FSA has already taken measures against two firms that it visited and is considering action in other cases.

The regulator has issued a formal private warning to one firm following evidence that payments were made to a third party without an adequate business case being established and documented. It has also commissioned a report to assess past payments to third parties made by another firm.

The FSA’s head of financial crime, Bob Ferguson, said: “Commercial insurance broker firms should recognise that, due to the nature of their core business, they are at risk of becoming involved in corrupt practices.

“The involvement of UK financial institutions in corrupt or potentially corrupt practices overseas undermines the integrity of the UK financial services sector. Firms should take an appropriate, risk-based approach to anti-bribery and corruption. Failure to do so will result in us taking action against them.”