In recent years, the Swedish Financial Supervisory Authority (FI) has largely focused on the supervision of insurance brokers. The main reason for the increased supervision is that a great number of insurance brokers apparently have neglected the consumer protection rules, with both an actual and a potential risk of customer loss as a result. The products that are brokered have become more and more complex and difficult to understand. For example FI has seen many cases where customers have bought complicated financial products (e.g. structured products) through insurance brokers and have not understood the risk and cost the products entail.

Current regulations allow an insurance broker who has received special attention from FI to choose to withdraw its authorisation to avoid a sanction and negative publicity. As no sanction has been noticed, FI often has no basis to refuse to grant a new authorisation if the same people start up a new company with similar business operations. This can be compared with the regulations for e.g. investment firms and fund management companies, where owners, board members and CEOs undergo a comprehensive assessment before they can acquire shares and/or become a member of the management team. A person who is proven unfit has difficulties to get an acquisition approved or to re-join a board in another financial institution.

To prevent unserious operators, FI seeks to be entitled to more extensive assessments in the insurance broker area, and have therefore petitioned the Swedish government with proposal for changes in some areas of the Insurance Mediation Act (2005:405). Such changes would make it easier to prevent unscrupulous operators from entering into, or re-entering, the market. Meanwhile, FI has sharpened the control of prospective mediators to ensure that they have proper skills and knowledge. The control implies a requirement for companies to more clearly than before show that all employed intermediaries has the right knowledge and skills for the business to be conducted.  A consequence of this new process is that processing time and permission fees will increase for the companies. On the other hand, we will hopefully see a market where serious players can compete on equal terms and where consumers are insured a higher protection when it comes to financial advice regarding financial products and insurances.

Karin Claesson