Despite Aon’s massive fine commercial insurance brokers are still not tackling bribery, according to a regulatory inquiry

A regulatory investigation has found significant weaknesses with commercial insurance brokers’ anti-corruption measures.

Some brokers’ have never even examined bribery and corruption issues, said the inquiry.

The findings emerged from the Financial Services Authority which, since handing Aon a massive £5.25m fine for failing to prevent its staff from paying bribes overseas, has been reviewing anti-corruption measures in the commercial insurance broker market.

The FSA said it has uncovered some good practice but that there were many common concerns that apply to all brokers.

Monitoring of third parties was generally very weak, said the FSA, with very few firms carrying out enough due diligence on their partners. Most brokers rely on a very general ‘market view’ of the integrity of third parties, said the report.

Firms also failed to conduct due-diligence on third parties when a team or business was acquired from other firms.

“Some firms, said the FSA, had made commission payments to persons without a clear understanding of why.

Some firms, said the FSA, had made commission payments to persons without a clear understanding of why.

Staff vetting at brokerages is weak compared with other financial service sectors, said the FSA. Brokers rely almost entirely on references and market gossip and very few firms carry out formal criminal record checks before or during employment. At the sane time, little anti-bribery and corruption training is provided to staff.

While systems were in place to control expense accounts, some firms told the investigators that large cash advances are sometimes given to staff to facilitate travel in higher risk overseas jurisdictions where they said credit cards are not readily accepted.

Anti-money laundering measures were also generally poor. Brokers were not good at reporting suspicious activity to the authorities, said the report, although many firms had appointed somebody to carry out a money laundering reporting role, despite not being required to by law.

Not all brokers suffered from all of these problems, said the regulator and many firms are checking their anti-bribery and corruption controls in light of the recent Aon fine. ‘Overall, the Aon fine appears to have had a significant deterrent effect,’ said the FSA.