Too late for complaint

While the Financial Services Authority client-money rules are far from ideal, if you are prepared to put up the capital, it is still relatively simple to comply with them. Indeed, if you run a non-statutory trust account, there is very little practical difference between the FSA rules and those of the General Insurance Standards Council or the Insurance Brokers' Registration Council. You can still grant clients credit, make refunds of premium, pay claims and so on - the only real difference is that you cannot take your cut until the client has actually paid the premium.

It is the brokers who have decided not to run a non-statutory trust account that seem to be getting into a dilemma. Some have decided to try and split out risk-transfer monies and, effectively, run two client accounts. What an expensive exercise, and to what end? So you do not have to put as much capital into your business.

Just think for a moment about the extra costs - inevitably your IT system will assume a single bank account; some clients will make a payment to you, part of which has to go into each account, so you will have to pay it all into the Client Money Statutory Trust, wait for it to clear and then move the risk transfer aspect out again. There will be two sets of books to run, two reconciliations to carry out and, of course, you will be constantly moving money from one account to another and then back again.

Even those who have bitten the bullet and have chosen to commingle all their monies in a statutory trust are surely now finding the practicalities tortuous and time-consuming.

Pre-funding premium refunds and claims, or worse still, explaining to a customer why he needs to wait until the insurer gets around to reimbursing you (the broker) before he (the client) can have his money back; calculating when you pay a wholesale broker, whether or not you have received confirmation of onward risk transfer, and at what point that takes place - the list goes on.

It is no use whingeing and whining now - we should have done that at the consultation stage (indeed a good few of us did, if you remember). We are stuck with these rules and we have to abide by and work within them. But, it does seem somewhat pointless to burden yourself with unnecessarily complicated procedures just to avoid funding your business adequately. It will cost a lot more in the long run.