British brokers’ handling of their clients’ money is about to be closely examined by the Financial Services Authority (FSA). The regulator is planning a large-scale review later this year after a pilot study revealed “a worrying level of failure by both wholesale and retail intermediaries to comply with FSA rules on client money”.

The review will involve visits to more than 200 wholesale and retail firms in particular areas of the UK. The FSA said in a statement that it wants to see “a significant improvement in how firms are complying with client money rules”.

“It is disappointing that some firms are still failing to implement satisfactorily our rules,” the FSA’s Head of Wholesale Insurance Firms, Julian Adams, said. “We will consider taking enforcement action against any firm where we see wilful non-compliance or an inability to handle customers’ money in line with our requirements.”

Andrew Honey, the regulator’s Head of Insurance Firms, says the pilot review at the end of last year “showed the same problems in the retail market as we saw before with wholesale firms. Ensuring that there is adequate protection of customers’ money held by authorised firms is a major priority.”