A few thoughts after the FCA fines HomeServe Membership Ltd £30,647,400 for mis-selling.
You will likely not be out there selling boiler repair insurance to the masses, but a few points from the FCA’s Final Notice are worth pondering by other insurance intermediaries, such as:
When did you last check on your board’s regulatory training programme?
If you asked the directors and senior managers to give an account of the controlled function(s) which they fulfil, what would be the reaction? Would you get a prompt and precise response, or would they be gaping like goldfish? Try it.
What status does the compliance function have in your firm?
A seat at the board? Tucked away and reporting indirectly? Is it appropriate for the level of compliance risk within the organisation?
Do you comply with the rules in ICOBS and think this is enough?
Think again. The HomeServe Final Notice does not mention ICOBS once. The FCA references DISP for the complaints handling, but otherwise they rely on Principles 3 (A firm must take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems), 6 (A firm must pay due regard to the interests of its customers and treat them fairly), and 7 (A firm must pay due regard to the information needs of its clients, and communicate information to them in a way which is clear, fair and not misleading). When did you last compare your business practices with the spirit of the Principles rather than with the letter of the rules?
The FCA took a long time to catch up with HomeServe (over 6 years from a Section 166 Skilled Persons Report in May 2007), but they got there in the end.