Small banks and commercial insurance brokers are still failing to effectively manage financial crime risk, the Financial Conduct Authority has said.
The regulator reviewed 10 commercial insurance intermediaries and 21 banks – five of each had already been part of the 2010 and 2011 thematic reviews – finding that most intermediaries’ controls failed to manage bribery and corruption risk effectively.
While some intermediaries’ policies on remuneration, hospitality and training had improved since the last review, bribery and corruption risk assessments were often too narrow and many firms failed to take a rounded view of the risks associated with individual relationships.
Half of the third party and client files reviewed were inadequate and senior management oversight was often weak, the FCA added.
While some firms had made good progress in addressing areas of weakness and there were examples of good practice, the regulator proposed further guidance for all firms to ensure that expectations are clear.
Tracey McDermott, FCA director of enforcement and financial crime, said that “significant” improvements are still required in this area.
“To do that successfully requires firms to use their judgement and common sense. That is not about box ticking or wholesale de-risking. It is about firms getting the basics right – understanding their customers, the risks they pose and managing those risks proportionately and sensibly.”
peter.walker@ft.com
