news
News
The FSA are clearly going for the low hanging fruit whilst trying to make sure that they make the most of their resources. This latest communication coupled with the recent news of them banning a director at a brokers for failure to control his co-directors regarding client money should start to cause a few sleepless nights in boardrooms across the spectrum.
FSA raises client money concerns with broker CEOs in letter 21 January, 2010
The FSA's key findings for insurance brokers
Good practice:
• In a few instances, firms regularly updated policies and procedures in line with regulatory developments.
Poor practice:
• Unclear allocation of duties by senior management led to confusion between staff or a lack of accountability.
• Client money processes had in some cases been delegated too far, leading to a lack of senior level responsibility and accountability.
• There were inconsistencies between Terms of Business Arrangements (TOBAs) and client money calculations.
• Review and sign-off processes surrounding client money calculations and reconciliations were not always evidenced.
• Some firms had failed to perform sufficient due diligence to assess client money risks arising from an acquisition.
• Whilst we allow Non-statutory trust bank accounts to be used to extendcredit for funding insurers’ and clients’ normal insurance transactions, client money may not be utilised for other purposes.
• Unallocated cash and legacy balances were not being reduced promptly enough.
• Firms over-relied on CASS audit reports rather than perform their own assurance checks.