Daily Insurance Industry News
 
 
Daily Insurance Industry News
Saturday 20th of January 2018
February 25, 2010

FSA calls brokers to account over capital resources

by Gill Montia

Story link: FSA calls brokers to account over capital resources

The Financial Services Authority (FSA) has written to insurance intermediaries outlining concerns that “many firms” do not have adequate financial resources.

The regulator says its supervisory work “regularly shows” that brokers are not paying sufficient attention to threats to their financial viability.

For example, one firm failed to make adequate provision for its obligations to fund additional pension contributions, resulting in a negative net asset position that required a capital injection from its parent company.

Another firm was relying on inter-company debts to demonstrate compliance with FSA rules, leaving it with two breaches to resolve.

The FSA is therefore demanding firms satisfy themselves that they have adequate capital and, if necessary, make good any deficit.

Finally, the letter also refers to client money handling procedures and the frequency with which “weaknesses” in these procedures are occurring.

 

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