Mactavish is calling on Herbert Smith Freehills, which is representing the Financial Conduct Authority in the COVID-19-related legal review of failed business interruption claims, to disclose if it also represents any of the insurers or brokers whose wordings will be subject to scrutiny.
The firm says that if it is the case, it would surely give rise to conflicts of interest, and that it is in the public interest to know, as the FCA is funded by the taxpayer.
Bruce Hepburn, CEO, Mactavish said: “The FCA is currently working with Herbert Smith Freehills on its court case review of BI claims. We believe the law firm has close relationships with many insurers and/or brokers. It may have advised on the very wordings being tested by the Court. In the spirit of transparency those insurers and brokers should agree that their identities should be disclosed to demonstrate there is no risk of any conflict of interest arising.”
Hepburn's organisation also believes that several of the policy wordings in those being considered for the FCA’s legal case were drafted by brokers, rather than insurers, and is calling on the watchdog to run a more in-depth review of the role played by brokers around the failed COVID-19 business interruption claims.
These are just the latest in a series of issues Mactavish has raised around the FCA’s oversight of brokers, including the watchdog's 2014 review of broker conflicts and more recently its review of payments from insurers to brokers.
“For there to be complete confidence in its current legal case of BI insurance claims linked to Covid-19, and for any future reviews of the sector, we believe the FCA needs to be completely transparent about its processes, and which partners it chooses to work with and why.
“The insurance industry is riddled with conflicts between insurers, brokers and law firms and the FCA needs to guarantee and demonstrate to beleaguered British businesses that its process is totally transparent and the potential for legal and commercial conflicts is minimised through active management."
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