External audit requirements for insurance intermediaries

Insurance intermediary audit requirements for firms.

Firms regulated by the FCA that hold client money which at any time of the year exceeds £30,000 under a statutory trust, or hold client money in a non-statutory trust

Client assets report (FCA rules)

You are required by the FCA to appoint an external auditor to report on your handling of client assets.

The auditor has to provide a report to your firm, for each relevant period, on the firm's client assets (including its handling of client money).

Incorporated entities (limited liability company or limited liability partnership) regulated by the FCA​

Accounts audit (Companies Act)

Under the Companies Act legislation you are required to appoint a statutory auditor who performs an annual external audit on the firm’s accounts.

However, for financial years ending on or after 31 December 2006, under the Companies Act legislation, you are not required to appoint an auditor who performs an annual external audit on the firm's accounts, so long as:

  • you meet the Companies Act criteria for the small companies audit exemption, and
  • you are not undertaking any activity within the scope of MiFID

The small companies audit exemption is available if at least two of the following criteria are met:

  • the annual turnover is not more than £10.2m
  • the balance sheet total for the year is not more than £5.1m
  • the company has 50 or fewer employees on average

Capital calculation (FCA rules)

You can include unaudited profits and unverified interim profits within your capital resources, if your firm is not required to appoint an auditor.

Unincorporated entities (sole traders or partnerships)

Accounts audit (Companies Act)

If you are an unincorporated entity (you are a sole trader or a partnership), you do not need to appoint an auditor under the CA 85.

Capital calculation (FCA rules)

You only need to appoint an auditor to report on client assets if you are a firm regulated by the FCA that hold client money which at any time of the year exceeds £30,000 under a statutory trust, or have permission to hold client money in a non-statutory trust.