UK insurers have come under fire after the Financial Conduct Authority (FCA) exposed what it describes as “widespread” evidence that companies are failing to supervise external salespeople.
The FCA is set to write to insurance companies after finding that more than half the firms from a sample of 15 could not demonstrate they could manage risks arising from salespeople, also known as appointed representatives. Among its findings was evidence of mis-selling by these appointed representatives – affecting around a third of the companies placed under review.
Speaking in a statement, Jonathan Davidson, director of supervision for retail and authorisation at the FCA, said: “While some principals did have a good understanding of their appointed representatives’ activities and their obligations as principal firms, we found widespread examples of poor practices across the sector. In many cases firms were simply failing to understand and manage the risks arising from their appointed representatives’ activities.
“General insurance is a large and important sector and we are concerned about the potential for customer detriment arising from the lack of oversight of appointed representatives. All principal firms need to consider these findings and look again at their practices.”
According to the FCA it has taken “early intervention” action against five of regulated firms – with two asked to cease their sales activities.
It’s not the first time that mis-selling has impacted the British financial industry. Five major banks in the UK set aside £31 billion from 2011-2015 after mis-selling relating to payment protection insurance.
We’ll bring you more on this story as it breaks.
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