Lloyd's of London head chides FSA

The head of Lloyd's of London, the insurance market, has criticised Britain's financial watchdog, the Financial Services Authority (FSA).

In a speech on Monday, Mr Prettejohn urged the FSA to force brokers to disclose the size of their commissions. "The FSA should change, and change now" said Mr Prettejohn, who wants it to move from "disclosure on request" to mandatory disclosure. The call came in a speech on improving the London insurance market.

"The FSA should not bide their time and 'wait and see'. They should seize the moment," Mr Prettejohn, Lloyd's chief executive said. The FSA took over regulation of the general insurance sector in January, but it sidestepped calls to require brokers to disclose the commissions they earn from insurers to their clients. Last week, the City watchdog gave brokers and insurers guidance on managing conflicts of interest. Brokers must give information on their commissions if, and only if, their customers request it, the FSA said.

In the US, lack of transparency about brokers' commissions has led to problems. The world's biggest insurance broker Marsh & McLennan said last week it would pay $850m to settle charges, raised by New York Attorney General Eliot Spitzer in October, that it sought to rig bids in conjunction with insurers. The probe centred around so-called contingent commissions, whereby brokers were rewarded according to how much business they brought to an insurer, an arrangement that did not always benefit brokers' customers. All of the insurance business written in the Lloyd's market is placed via brokers.