The FCA has fined insurance broker Bluefin Insurance Services £4,023,800 for misleading customers about its business strategy during a period it was wholly owned by Axa UK.
The regulator said it fined Bluefin for having "inadequate systems and controls" and failing to provide information to its customers about the company's independence in a way that was "clear, fair and not misleading".
Between 9 March 2011 and 31 December 2014, Bluefin promoted itself as "truly independent" in the advice it provided and the insurers it recommended to customers. It was, however, wholly owned by Axa UK during this period although it has since been sold by the insurance giant.
The regulator argued Bluefin's independence was compromised by its culture and business strategies, which included a policy that focused on increasing the business placed with parent company Axa UK.
Bluefin's brokers did not disclose the policy and so, the FCA said, customers risked being misled into believing they were dealing with a broker who would conduct an unbiased search of the market.
The watchdog also concluded Bluefin failed to implement adequate systems and controls to manage the conflict that arose from its ownership.
The insurance broker agreed to settle at an early state of the investigation and so received a 30% reduction in its overall fine. Without the discount, the fine would have been £5,748,200.
FCA executive director of enforcement and market oversight Mark Steward said: "Insurance brokers must promote a culture in which they act in their customers' best interests and provide them with the information they need to make an informed decision.
"This is central to the relationship between the industry and its customers. It is also unacceptable that firms hold themselves out as independent when they are not."
The FCA noted it made no criticism of any member of the Axa Group other than Bluefin.
Last week the regulator started civil legal action against two firms it alleges misled savers and promoted self-invested personal person investments into alternatives such as tree plantations.
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