FCA Sends Portfolio Letter to Personal and Commercial Lines Brokers

The FCA has sent a portfolio letter to personal and commercial lines insurance intermediaries, setting out its view of the key risks they could pose to consumers or markets.

The letter applies to:

  • General insurance intermediaries serving retail and/or commercial customers,
  • Loss assessors and
  • Firms for which broking of insurance products is ancillary to their primary business

In the letter, the FCA highlights what it believes to be the three key risks, which are:

  • Pricing practices and value for money
  • Product oversight and governance
  • Client assets and orderly wind down

The letter also lists some additional considerations for firms, which are:

  • Diversity and Inclusion (D&I) and Environmental Social and Governance (ESG)
  • The Senior Managers and Certification Regime (SM&CR)
  • Cyber threats and operational resilience
  • Regulatory Responsibilities
  • Oversight of Appointed Representatives (ARs)
  • Post-sale verification
  • Keeping up to date with FCA developments

There was also a reminder about the importance of governance and oversight, with poor controls linked to consumer harm. Brokers should consider the risks outlined above and whether these relate to their own business, addressing any issues identified to prevent harm occurring.

Firms are expected to keep up to date with regulatory developments generally and with the areas covered in the letter. A further portfolio letter is expected towards the end of 2023 to provide the regulator’s updated view of the key risks firms pose, the extent to which these risks are being mitigated, and its updated supervisory plans as a result.

The FCA recommends that firms also read its business plan for 2022/23 alongside this letter as the harms identified for this portfolio resonate with some of the key themes identified within the 2022/23 plan.

If you need any advice on this or any other compliance issues, please contact your RWA Business Manager or email helpdesk@rwagroup.co.uk.

About the author

Kirk joined RWA in 2015, having worked in the financial services sector for many years. He started out in both the general insurance and mortgage advice arms of HSBC, before becoming the Compliance Officer at Go Compare and Training & Competence Manager at Optimum Credit. 

At RWA, Kirk is Deputy Head of Compliance. He supports RWA clients by looking after their compliance, training and competence needs and keeping them up to date with regulatory changes. He promotes the achievement of fair customer outcomes and specialises in designing and implementing T&C schemes for firms of all sizes.

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