The report follows a review carried out by the FSA between December 2008 and January 2010 to assess how commercial insurance brokers in the UK are addressing the risks of involvement in corrupt practices, such as bribery. The report sets out the FSA’s findings and includes examples of good and poor practices in specific areas, such as due diligence and incident reporting. The FSA concluded that the approach of broker firms to higher risk business with third parties has been far too informal and that many firms are not operating at acceptable standards. The FSA also noted that there were serious weaknesses in some broker firms’ systems and controls which had led to a significant risk of illicit inducements being paid to third parties in order to win business. The FSA also found that many firms could not demonstrate that they had adequate procedures in place to prevent bribery, which is a defence to the Bribery Act 2010 criminal offence of “failing to prevent bribery”.
While the report is not formal guidance from the FSA, the FSA has noted that it expects firms to review its findings and to implement and maintain more effective controls where necessary. The FSA has also stated that the report’s findings and the examples of good and poor practices will be relevant to firms in other sectors.
