Last December SME broker Bluefin – which will be rebranded as
Jelf this year – made waves after it was slapped with a whopping £4 million fine for its compromised independence in relation to former owner
AXA UK.
Now Adam Epstein, a partner at law firm Mishcon de Reya, has called the bias story an extreme case.
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“There is much of interest in this Notice for those designing or reviewing systems and controls, especially in relation to conflicts generated by parent companies (or subsidiaries),” said Epstein, in his article published by
Mondaq. “While the need to make such systems and controls more than just a paper exercise is common to all firms, Bluefin can be considered an extreme case in that the preference for AXA (and the resulting conflict) was inculcated into all aspects of the firm from the transaction level to the aspirational targets.”
As reported, the Financial Conduct Authority (FCA) found that the broker, now owned by
Marsh, failed to implement adequate systems and controls to manage the inherent conflict from it being owned by AXA. “Bluefin’s independence was compromised by its culture which promoted business strategies, including a policy which focused on increasing the business placed with its parent company, over treating customers fairly,” said an FCA statement.
Citing the FCA’s findings, Epstein highlighted the extent of Bluefin’s preferential treatment for the then owner.
“In this sense, it is perhaps surprising that the FCA was content to treat it as a level 3 and not a level 4 matter,” commented Epstein. “One factor behind this may be the absence of any specific finding as to customer loss.”
Bluefin, had it not settled early, could have paid an undiscounted fine of £5,748,293.
Related stories:
FCA slaps Bluefin Insurance with £4 million fine
Marsh announces renaming of Bluefin business
