Non-financial misconduct

The FCA issued a Dear CEO letter to wholesale general insurance firms on 6 January, setting out its expectations for tackling non-financial misconduct in wholesale general insurance sector. 

Firstly, we need to establish what a wholesale general insurance firm is. For typical ATEB clients these will be brokers that act as an intermediary between a retail broker and an insurer. 

The letter outlines cultural risks that can lead to consumer harm including discrimination, harassment, victimisation and bullying that create a negative culture. 

The FCA sets out its expectations under the following key drivers:

  • leadership;
  • purpose;
  • approach to rewarding and managing people; and
  • governance, systems and controls.

All of the above flows from a healthy culture that starts ‘from the top’ i.e. the competence and capability, honesty, integrity and reputation of the senior managers. It is no surprise then that the FCA makes reference to the Senior Managers and Certification Regime in this context:

“The SM&CR provides an opportunity and catalyst
  to 
transform the culture in financial services.”

Evidence of failure to tackle non-financial misconduct could lead to the FCA determining that a Senior Manager is not fit and proper to fulfil a senior manager role. 

The FCA expects a firm to have clear purpose, providing clarity of direction that mitigates inconsistencies between strategy and practice. They are keen to highlight the expectation of strong whistleblowing processes and appropriate incentive structures. 

The FCA will hold regular events and aim to identify and share knowledge that supports change in culture. To encourage firms to become involved in future events and receive emails they have set up the following link to register.

Important Note: ATEB news is intended to provide general information ONLY. The content, including any views expressed or guidance provided, does not replace the need to comply fully with FCA Rules and Guidance. Unless you have discussed news article content with ATEB, and specifically how it relates to your circumstances, then ATEB disclaims all liability and responsibility and actions arising from any reliance placed upon it. For the avoidance of doubt therefore, any reliance you place on such information without our consultation is at your own risk.

ATEB Compliance offers compliance and regulatory advice.

ATEB Suitability provides report writing software for the financial services market.

Our View

It is somewhat damning that the FCA has felt the need to send a letter about this.

While the letter was specifically aimed at wholesale GI firms, we cannot see why such firms would be uniquely prone to the type of misconduct described. It is unrealistic to believe that no other financial firms have a less than perfect culture.

Accordingly, we would suggest that it would be beneficial for all firms to read and follow the principles highlighted.

Action Required By You

  • Identify a senior manager to be responsible for actioning the letter;
  • Register to receive updates;
  • Ensure progress is regularly reviewed;
  • Monitor the outcomes;
  • Record actions and benefits;   
  • Contact ATEB if you need further clarification or assistance.
SUIT - Beautiful Reports
CREATE BEAUTIFUL
SUITABILITY
REPORTS
SUIT - Complete Control
TAKE BACK
CONTROL OF YOUR
SUITABILITY REPORT
PRODUCTION
SUIT - Comp confidence
SUITABILITY
REPORTS
WITH FULL
COMPLIANCE
CONFIDENCE
COMP - Hands on
HANDS-ON COMPLIANCE
Helping you to implement solutions
COMP - File checking
FILE CHECKING
All business cases checked, including DB transfers
COMP -166
Section 166 and
Regulatory Reviews
Extensive S166 experience
COMP -healthchecks
Audits and
Health Checks
Need a regulatory check-up?
COMP -166
E-COMPLIANCE
A lighter touch support service
COMP -166
FCA Applications
We have completed hundreds
of Part IV applications
previous arrow
next arrow

About the Author

Technical Manager - Often referred to as the Oracle or the Sage, Alistair has a wealth of financial services experience. He is our go-to Technical Manager and enjoys nothing more than a complicated conundrum. Feel free to test his renowned knowledge by getting in touch.

Contact Us

Brought to you by

Explore more articles in this category

Other articles that you might be interested in