The FCA has fined JLT Specialty Limited (JLTSL), which provides insurance broking and risk management services, £1,876,000 for failing to maintain appropriate safeguards against the risk of bribery and corruption when making payments to oversees third parties.

The FCA found that during the period between 19 February 2009 and 9 May 2012, JLTSL failed to conduct proper due diligence before entering into a relationship with partners in other countries who helped JLTSL secure new business, known as overseas introducers, in breach of Principle 3 of the Authority’s Principles for Businesses on management and control. During the relevant period, JLTSL received almost £20.7 million in gross commission from business provided by overseas introducers and paid them over £11.7 million in return. Inadequate systems around these payments created an unacceptable risk that overseas introducers could use the payments made by JLTSL for corrupt purposes, including paying bribes to people connected with the insured clients.

JLTSL failed to adequately implement its own bribery and corruption policies during the relevant period and therefore did not take the necessary steps to control the risks in their business. In light of the FCA’s concerns regarding the adequacy of JLTSL’s controls, at the request of the FCA, JLTSL varied its permissions, such that it was unable to enter into new relationships with third parties without prior approval from an independent skilled person, until such time as the FCA was satisfied that JLTSL could adequately mitigate the risk of making payments to overseas third parties.

JLTSL’s penalty was increased because it failed to respond adequately to warnings the FCA had given to the industry generally and to JLTSL specifically. The fine of £1,876,000 follows JLTSL’s agreement to settle at an early stage of the investigation. Accordingly, JLTSL qualified for a 30% (stage 1) discount on the original penalty of £2,684,013. JLTSL has subsequently put in place updated bribery and corruption policies which the FCA has confirmed are appropriate.

View FCA Final Notice – JLT Specialty Limited, 19 December 2013