The broker who could not tip off the client

Several duties collide, and they do not cancel each other out.

To the insurer. The broker presents the risk. Passing on a schedule with disqualifications removed is a false representation; at minimum it breaches the duty of good faith and the broker's terms of business with the insurer. It may amount to a fraud offence by the individuals involved and by the firm if it is complicit. 'The client told us to' is not a defence.

To the client. Confidentiality and the duty to act in the client's best interests are real, but they do not extend to helping a client deceive an insurer and do not override statutory reporting obligations. The correct advice to the client is that disclosure must be complete and that you cannot submit inaccurate information.

Tipping off. If a suspicious activity report is made or contemplated, telling the client - or telling the branch director, who may tell the client - may itself be an offence. Even where the legislation does not bite, alerting the client allows evidence to be destroyed or the account to be moved. So no discussion with the client, and none with the branch director, until the MLRO and legal have decided who may be told what.

Ranking. Criminal and reporting obligations come first; then the insurer's interest in not being deceived; then the client's confidentiality, which is displaced to the extent necessary to prevent or report a crime. The 'keep it in-house' instruction is an instruction to conceal and must be declined in writing.

Next 48 hours

• Secure evidence today: export the email chain and the original and revised schedules, the account handler's notes and sent items, and the client's prior submissions. Nothing is deleted; access is restricted and recorded.
• Escalate to the MLRO and Head of Compliance, and to the board or audit committee as governance requires. Record the time and content of each escalation.
• Take a short written account from the account handler as a witness, not as an accused. Whether discipline follows is a separate decision: a 23-year-old with no training replying 'fine' is a control and training failure as much as a conduct failure.
• Ask legal for a view on what may be disclosed to the insurer and when, given tipping-off exposure.
• Recuse the branch director from the file and record the recusal.

The renewal Do not submit it as drafted. Options: (a) with legal clearance, contact the insurer's fraud team and disclose the accurate position; the insurer is the party at risk of deception, and disclosure to prevent a crime is generally the safer course; or (b) tell the client you cannot act on the information supplied and ask for a corrected schedule, with no mention of any report.

Hold the deposit under client money rules until the placement decision is settled. Review prior years' submissions to this and other insurers for the same omission, and record what you find. Keep a decision log naming who authorised each step.

The relationship and the friendship are conflicts of interest to be managed, not reasons to soften the outcome.

• Recuse the director formally and in writing, naming an alternative escalation point. Tell the director only what the tipping-off analysis permits, in the terms legal approves - which may be nothing beyond 'this file is being handled by compliance'.
• Manage the client conversation: two people present, opening with 'we cannot submit information we know to be inaccurate', not with an accusation. Give the client the chance to supply a correct schedule. Their response is itself evidence.
• Be clear about consequences without threatening: with correct information you will seek terms; if the client insists on the inaccurate schedule, you will decline to act and the client must place the risk elsewhere - where repeating the omission is their exposure, not yours.
• Decide at senior level whether to resign the account. A client whose transport manager attempted to deceive an insurer is an ethical and commercial judgement for management, documented with reasons; the size of the commission is a factor against resignation, never a reason to conceal.
• Record everything: the decision log, legal advice taken, what was said to the client and when, the conflict steps. Expect the insurer, the regulator or a court to read it.
• Fix the cause: file review shows a junior handler with no financial crime training replying 'fine' to an unlawful request. That is a training, supervision and incentive problem at firm level, and the remediation should be recorded alongside the file outcome.