BROKERS must treat small businesses better when the firms come to them to buy insurance, the city watchdog warned yesterday.
The Financial Conduct Authority (FCA) has found intermediaries sometimes act as an agent for both the small business and the insurance firm, giving rise to conflicts of interest which are not properly managed.
Brokers do not always identify the risks, and even when they do, often fail to resolve them, for instance just telling customers the conflicts exist rather than addressing them.
As a result customers can be treated poorly, the FCA said.
“Small businesses are experts in their particular field but are often not experienced in buying insurance,” said supervision boss Clive Adamson. “That is why they need to be able to trust their insurance intermediary to act in their best interests.”
But lawyers said the review shows the industry is not as bad as the regulator had previously feared.
“The FCA hasn’t found the smoking gun that some thought it was looking for, which will come as a welcome relief to the industry players who have worked hard to ensure that effective controls in remuneration and placement exist,” said RPC partner Charley Taggart.