The Dubai Financial Services Authority (DFSA) has imposed a fine of $455,176 on reinsurance brokerage Ed Broking (MENA) Limited for contraventions of DFSA legislation, including engaging in misleading and deceptive conduct.
The Firm agreed to settle the matter and pay a fine which comprises disgorgement of $175,343 and a penalty of $279,833.
The fine was reduced from $575,104 as a result of the settlement.
Ed Broking (MENA) Limited fined by DFSA for reinsurance misconduct
The DFSA determined that the Firm provided cedent insurers and reinsurers with two different premiums in respect of the same reinsurance placement. The cedent insurers are the Firm’s clients and are the insurers issuing the underlying policies.
The Firm misled reinsurers about the deductions applied on the premium and the brokerage commission earned by the Firm. The Firm also misled a client about the brokerage earned from 121 placements, as well as the deductions to the premium from some of those placements.
The misconduct was facilitated by the Firm’s practice of not disclosing brokerage commissions to its clients and its failure to adhere to its own systems and controls. The misconduct involved the use of altered documents.
Reinsurance broker Ed Broking fined for failing to disclose brokerage commissions
The DFSA also found that the Firm failed to take steps to ensure that the communications with cedent insurers and reinsurers were clear, fair, and not misleading. The Firm failed to act with due skill, care, and diligence.
The DFSA acknowledges that the Firm reported the misconduct to the DFSA, conducted an investigation, and paid restitution to clients in respect of placements in which altered documents were used.
“The Dubai Financial Services Authority (DFSA) expects financial services firms within Dubai International Financial Centre (DIFC) to uphold the highest standards of conduct in their business dealings. In misleading clients and reinsurers as it did, Ed Broking (the Firm) failed to meet these expectations. The fine imposed on the Firm reflects the seriousness of its misconduct and serves to warn others against engaging in similar conduct,” Alan Linning, Managing Director, Enforcement, of the DFSA said in a statement.
The DFSA remains committed to developing, administering, and enforcing regulations of financial services within DIFC. As part of its strategy and mission, the Authority will continue to implement enforcement measures and provide guidance to ensure that all entities operating within the Centre adhere to the standards of regulation and conduct.
A copy of the Decision Notice setting out details of this matter can be found in the Decision Notices section of the DFSA website.
