Question 1 – Learning Outcome 1 (10 marks)
You are an employee of a compliance consultancy and will visit DKA Ltd and BBT plc, who are both UK-based insurance brokers.
DKA Ltd is a small general insurance broker who only transacts commercial business for UK-based small and medium enterprises (SMEs).
BBT plc is a global insurance broker managing all classes of business with international coverage.
(a) Identify, with justification, two significant regulatory issues you will investigate on your visit that have the greatest impact on the way DKA Ltd operates. (4)
(b) Identify, with justification, two significant regulatory issues you will investigate on your visit that have the greatest impact on the way BBT plc operates. (6)
Two significant …show more content…
This resonates particularly with DKA Ltd as they are a “general insurance broker who only transacts commercial business for UK-based small and medium enterprises” so I would investigate this regulatory issue. This is a significant regulatory issue as broker earnings are required to be promptly disclosed to commercial customers upon request – this may also be something that brokers would not like to disclose to customers and as such, it may be a principle that is not being abided by. Another reason why ICOBS 4 and Commission disclosure to commercial customers is a good regulatory issue to investigate is that direct instructions and guidelines are …show more content…
These earnings could be in the form of a fee, brokerage or both. It is a requirement of the broker, by the FCA, that the actual amount of brokerage is disclosed to the commercial customer when they ask them to do so. This would have a significant impact on a global broker as they may be earning very large sums of money on specific commercial clients and may wish not to disclose this amount, even when asked. This can be displayed clearly in the Spitzer investigation, which involved Spitzer bringing a civil law suit against Marsh & McLennan (the world’s largest insurance broker. This is further summed with the following extract, (taken from an article on the investigation in the Economist, http://www.economist.com/node/3308447) “The charges are part of an ongoing investigation into industry practices that suggest insurers and brokers have acted collectively (and secretly) to betray customers.” What followed, in the UK, was an independent review of transparency and disclosure and commission disclosure in the wholesale and commercial markets – an area dominated by large brokers comparable to BBT, showing why this would be s significant area to
You are an employee of a compliance consultancy and will visit DKA Ltd and BBT plc, who are both UK-based insurance brokers.
DKA Ltd is a small general insurance broker who only transacts commercial business for UK-based small and medium enterprises (SMEs).
BBT plc is a global insurance broker managing all classes of business with international coverage.
(a) Identify, with justification, two significant regulatory issues you will investigate on your visit that have the greatest impact on the way DKA Ltd operates. (4)
(b) Identify, with justification, two significant regulatory issues you will investigate on your visit that have the greatest impact on the way BBT plc operates. (6)
Two significant …show more content…
This resonates particularly with DKA Ltd as they are a “general insurance broker who only transacts commercial business for UK-based small and medium enterprises” so I would investigate this regulatory issue. This is a significant regulatory issue as broker earnings are required to be promptly disclosed to commercial customers upon request – this may also be something that brokers would not like to disclose to customers and as such, it may be a principle that is not being abided by. Another reason why ICOBS 4 and Commission disclosure to commercial customers is a good regulatory issue to investigate is that direct instructions and guidelines are …show more content…
These earnings could be in the form of a fee, brokerage or both. It is a requirement of the broker, by the FCA, that the actual amount of brokerage is disclosed to the commercial customer when they ask them to do so. This would have a significant impact on a global broker as they may be earning very large sums of money on specific commercial clients and may wish not to disclose this amount, even when asked. This can be displayed clearly in the Spitzer investigation, which involved Spitzer bringing a civil law suit against Marsh & McLennan (the world’s largest insurance broker. This is further summed with the following extract, (taken from an article on the investigation in the Economist, http://www.economist.com/node/3308447) “The charges are part of an ongoing investigation into industry practices that suggest insurers and brokers have acted collectively (and secretly) to betray customers.” What followed, in the UK, was an independent review of transparency and disclosure and commission disclosure in the wholesale and commercial markets – an area dominated by large brokers comparable to BBT, showing why this would be s significant area to