Regulator acts after tip-offs about unfair practices
The Financial Services Authority (FSA) could take action on how brokers run premium finance deals for commercial clients, following tip-offs about unfair practices.
Insurance Times understands that the FSA has heard several complaints about brokers operating premium finance schemes, and is quizzing a sample of brokers about how they run these deals.
The FSA investigation is an example of a thematic review, where the regulator probes an area of financial services to see if an issue is serious enough for it to take tougher action. There is no suggestion that the brokers quizzed by the FSA run unfair schemes or are anything other than a sample of the market.
The FSA confirmed it had contacted 26 brokers for the exercise, but would not comment further.
But in a copy of the questionnaire seen by Insurance Times, the FSA has homed in on:
- The interest and commission brokers get from the deals
- How much brokers mark up premium finance policies to their clients, and whether the client is told about the mark-up
- How much information brokers give their clients about the range and details of premium finance deals
- Whether brokers run their own premium finance deals or used an insurer or third party.
Brokers commonly offer premium finance deals that let their clients pay premiums in instalments. These can come from an insurer, third party or be arranged by brokers themselves. Some brokers charge their clients a high commission for the service, however.
The regulator has asked the brokers for details on premium finance deals from 2010 and 2011.
For more, read this week’s Insurance Times.
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