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FCTR 9.1 Introduction

FCTR 9.1.1G

1Who should read this chapter? This chapter is relevant, and its statements of good and poor practice apply, to:

  1. commercial insurance brokers and other firms who are subject to the financial crime rules in SYSC 3.2.6R or SYSC 6.1.1R; and

  2. e-money institutions and payment institutions within our supervisory scope.

Except that FCTR 9.3.3G and FCTR 9.3.4G only apply to those firms or institutions who use third parties to win business. It may also be of interest to other firms who are subject to SYSC 3.2.6R and SYSC 6.1.1R.

FCTR 9.1.2G

1In May 2010 the FSA published the findings of our review into the way commercial insurance broker firms in the UK addressed the risks of becoming involved in corrupt practices such as bribery. The FSA visited 17 broker firms. Although this report focused on commercial insurance brokers, the findings are relevant in other sectors.

FCTR 9.1.3G

1The report examined standards in managing the risk of illicit payments or inducements to, or on behalf of, third parties in order to obtain or retain business.

FCTR 9.1.4G

1The report found that many firms’ approach towards high-risk business was not of an acceptable standard and that there was a risk that firms were not able to demonstrate that adequate procedures were in place to prevent bribery from occurring.

FCTR 9.1.5G

1The report identified a number of common concerns including weak governance and a poor understanding of bribery and corruption risks among senior managers as well as very little or no specific training and weak vetting of staff. The FSA found that there was a general failure to implement a risk-based approach to anti-bribery and corruption and very weak due diligence and monitoring of third-party relationships and payments.

FCTR 9.1.6G

1The contents of this report are reflected in FCG 2 (Financial crime systems and controls) and FCG 6 (Bribery and corruption).