We have carried out Binding Authority Audits for London Market Brokers.

This involves as a minimum:

• Checking whether the policies issued correspond to the slip,
• Checking whether the slip and the policies issued correspond the clients instructions,
• Checking whether if the slip and policy deviate from the clients instructions those changes have been agreed by the client,
• Checking whether the file is in acceptable order and in particular whether all the documentation necessary to evidence the clients instructions, especially any changes to the original instructions, is on the file,
• Where the client or their agent communicates with the Broker and the London Market, that such communication is translated.

The starting point is the firm’s own set of procedures but it is also important to consider any improvements that could be made.  For example, is one person carrying out functions that should be split between two or more people?  As departments or teams are reorganized it may appear to be more logical or efficient for certain functions to be centralized but in doing so a situation can arise where the independent check have been lost.  This is particularly a danger where a delegated authority is being exercised.

The objective of the audit is to identify and remedy concerns before an official audit is carried out and thereby reducing the areas for crtitcism.