Europe

Warning to brokers

Financial services advisory firm BDO Stoy Hayward LLP issued a warning to insurance brokers to take all necessary steps to ensure that money they deposit with banks on behalf of their clients is safe if the bank were to fail. Fiona Raistrick, Head of the Financial Services Regulatory Practice at BDO Stoy Hayward, said that under the Financial Services Authority’s “Principle 10”, all regulated firms, including insurance brokers who collect an insurance premium from consumers, must arrange adequate protection for client assets and meet its responsibilities. Ms Raistrick said that while insurance intermediaries currently have a lot to worry about, the holding of client monies should not be allowed to slip down the agenda. She noted that while the FSA has not issued particular guidance as to how investment and insurance firms should negotiate the issue, the Principle 10 regulations clearly outline their responsibilities. She said the FSA was unlikely to look kindly on firms who did not make any attempt to protect client money, particularly as so many consumers look set to lose money with the collapse of the Icelandic banking system. Ms Raistrick concluded that any company that did not make strong efforts to protect clients could expect hefty fines.