The FSA has sent letters to executives at key financial services trade bodies to remind firms the acceptance of inducements by intermediaries could be seen as a conflict of interest for consumers.
Protection and general insurance advisers who may be new to FSA regulation may needed to be reminded it is largely their responsibility to ensure they do not take ‘inducements’ from insurers which could be seen to conflict with their duties of acting in the best interests of clients.
While the FSA is keen to stress the ,a href="www.fsa.gov.uk/mgi/letter_01feb05.pdf)" target="_blank">letters are not guidelines and specific examples will not be set, circumstances which could be seen as inducements include attaching inducements on the expectation a contract with a particular customer will be renewed with that insurer.
“We are not going any further in specifying types of inducements and circumstances in which firms might breach this rule as we believe that firms are best placed to judge when an inducement is likely to give rise to a conflict and to take appropriate action.”
That said, insurers also have a responsibility to ensure the inducements they may offer to firms do not breach FSA rules, says the letter.
Further comments on this aspect of ICOB rules were made following requests from general insurance industry for help on conflict management rules, adds the FSA.IFAonline
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