< Blogs | 23.04.2019



It’s official – the UK’s wholesale broker market has the all-clear from the Financial Conduct Authority and is free to operate as normal

The UK’s wholesale broker market has breathed a huge sigh of relief after the Financial Conduct Authority (FCA) gave the sector a clean bill of health.

In a first, the FCA has closed its market study without further action beyond the usual monitoring.

London Market Association CEO Sheila Cameron said: “We are actively pursuing technological advancements such as PPL, which should increase market efficiency and allow us to continue to provide complex and comprehensive insurance solutions, together with world-leading claims handling, at the most competitive rates for our policyholders.”

Steve White, chief executive at the British Insurance Brokers’ Association, added:
“The fact that the FCA closed this assessment at an unprecedented early stage is a welcome step and validates our view that the wholesale insurance market is a highly competitive place.

“It is also welcome that the FCA intends to deal with any follow-up matters on a business-as-usual supervisory-led basis.”


While the sector as a whole got a clean bill of health, the FCA did have some concerns and will continue monitoring:

  • Firms’ management of conflicts of interest
  • The information firms disclose to clients
  • Contractual agreements between brokers and insurers that, in a small number of cases, have the potential to limit competition.

Christopher Woolard, FCA executive director of strategy and competition, said: “This was a significant and in-depth analysis of a sizeable and complex market to determine whether clients were at risk of harm.

“Encouragingly, we found no evidence that they were, but we found some areas with scope for improvement and we will work with the industry to ensure these are addressed.”


As part of the process the FCA conducted a survey of insureds, which found:

  • On the whole, the London insurance market (LIM) works efficiently, providing global access
  • The LIM is used to access its niche capacity, expertise and knowledge that is rarely available elsewhere
  • The choice of wholesale broker is generally well informed and is tested from time to time; insureds generally have high levels of satisfaction with service, both pre-sale (quote, underwriting) and post-sale (claims, admin, documentation)
  • Insureds are aware of charges and feel commissions/fees are largely transparent (for brokers perhaps more than for some corporates)
  • Almost all feel they get very good value for money
  • Additional services are available and often included for added value, although insureds feel that wholesale brokers are not especially proactive or innovative
  • There is every opportunity to switch wholesale broker if needed, with emotion (relationship/trust) the main barrier rather than physical barriers (admin, etc)
  • The LIM is built on individuals’ expertise, knowledge and understanding of risk, leading to robust and lasting personal relationships; it remains a relationship business.
    The research also identified some potential issues, including:
  • Three respondents mentioned the use of restrictive practices between brokers and underwriters, including ‘blocking’ arrangements in which underwriters working with a broker on a specific risk refuse to quote on that risk for another broker
  • Four respondents said broker charges are not fully transparent in some instances. Their concerns relate to reinsurance placements and levels of commission for certain classes
    of insurance
  • In some instances, it was claimed there is too much compliance and lack of consistency when implementing increased regulations.


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