GAP and motor-related insurance providers have been identified by the FCA as among principal firms failing to properly supervise appointed representatives.
The FCA said three of the 15 principals within its thematic review sample were involved in the sale of GAP and other motor-related insurances via appointed representatives (ARs).
It said all of these principals provided systems that their ARs were required to use. However, there was a lack of appropriate additional monitoring around the sales processes and activity.
In one of the ARs that it reviewed, the FCA found evidence of mis-selling or inconsistent signature records within customer documentation.
“This was identified by our testing, but the principal involved was not previously aware of these issues. This demonstrated that reliance on system controls only, without carrying out sufficient supporting monitoring work, can expose both principals and customers to a material risk of mis-selling,” said the FCA.
Another principal, which was acting as an umbrella for a network of broker ARs, required the large majority of these ARs to transact business using its core broking system, which provided an audit trail of the actions taken that the principal could use to monitor its ARs activities.
This principal had also appointed some ARs whose business activities could not be efficiently and effectively transacted using the same system and processes. This principal was much less able to demonstrate its control and oversight of these business activities, the FCA said, and had not made adjustments to its monitoring activity to reflect these increased risks.
“Additionally, we had concerns about inconsistent use of the system, process work-arounds and the use of non-approved versions of key sales documentation, which the principal either was not aware of or tolerated.
“As result, customers were not always given appropriate information to make an informed decision, or bought products that may not be suitable for their needs or under which they were ineligible to make a claim,” said the FCA.