Hiring an FC for a Broker or MGA: What to Test

Interviewing a Financial Controller for an insurance intermediary is one of the harder assessments in regulated finance, because the differentiating knowledge is narrow and a generalist interview will not reach it. A candidate can be entirely credible on the close, the balance sheet and the audit and still not know whether the money in the client account belongs to the client or the insurer — which is the single fact everything else in the role rests on. This guide sets out what to test, the questions that reach it, the red flags, and how to specify the role so the shortlist contains people who have done it. For what the role itself involves, see our guide to finance in insurance intermediaries, and for how we run these searches, our page on Financial Controller recruitment for insurance intermediaries.

The guide is written for brokers, managing general agents (MGAs), Lloyd’s coverholders and wholesale intermediaries — firms authorised by the Financial Conduct Authority to carry on insurance distribution, which brings a prudential, client money and reporting regime that ordinary commercial finance never meets.

What you are testing beyond the standard

Assume the general FC capabilities are being assessed as normal — ownership of the close, balance sheet substantiation, the audit relationship, leading a team. Our employer’s guide to interviewing a Financial Controller covers those. On top of them, four sector-specific capabilities determine whether the appointment works.

Client money under CASS 5 — the calculation, the reconciliation, and the judgement about what falls into it.

Risk transfer — understanding that it is conferred by agreement rather than assumed, and knowing how to verify it.

Sector accounting — commission recognition, IPT, and where relevant bordereaux and delegated authority.

And regulatory rhythm — comfort with obligations that are dated and non-negotiable rather than internally set.

The technical ground the interview should cover

A credible candidate should be able to talk about each of the following areas in practical rather than textbook terms.

MIPRU: capital resources and professional indemnity insurance

Insurance intermediaries sit under the prudential sourcebook for mortgage and home finance firms and insurance intermediaries (MIPRU) in the FCA Handbook. Two parts matter to the FC. The first is the capital resources requirement: a minimum that scales with the firm’s annual income and is set higher where the firm holds client money. The FC should know how the firm calculates its capital resources, which balances are deducted, and how much headroom there is. The second is professional indemnity insurance, where MIPRU sets minimum limits of indemnity and conditions on excesses. The FC usually checks that the cover meets the rules and that any large excess is reflected in the capital calculation.

CASS 5 insurance client money

CASS 5 governs money an intermediary holds in connection with insurance distribution. It is distinct from CASS 7, which covers investment firms. The FC owns, or oversees, the client money calculation and reconciliation, the designation of client bank accounts, trust letters and acknowledgements from banks, and the year-end client money audit. Our introduction to CASS and client money and the guide to the CASS reconciliation in practice cover the mechanics.

Risk transfer

Where an insurer has agreed in writing that the intermediary receives premiums as its agent, money paid by the customer is treated as paid to the insurer, and it sits outside the client money rules for the customer’s protection. Risk transfer is therefore a matter of the terms of business agreement with each insurer, not a general feature of a broker’s business, and most firms run a mixture: some insurers grant it, some grant it for premiums but not claims or refunds, and some do not grant it at all. The FC needs a current map of which agreements say what, because the client money calculation depends on it.

Statutory trust and non-statutory trust

CASS 5 allows a firm to hold client money under a statutory trust, the default, or a non-statutory trust. In general terms, the statutory trust is the more restrictive arrangement; the non-statutory trust gives more operational flexibility — for example around advancing credit from the client account in certain circumstances — but comes with additional conditions, including higher capital resources, documented systems and controls and an auditor’s involvement. The FC should understand why the firm chose its structure and what that costs in working capital and control effort.

RMAR and the regulatory reporting calendar

Intermediaries report to the FCA through the Retail Mediation Activities Return (RMAR), submitted via RegData, which replaced GABRIEL. The RMAR covers the balance sheet, income, capital resources, PII and client money, so errors in the ledger flow straight into a regulatory return. Our guide to regulatory reporting through RegData sets out the wider landscape.

Consumer Duty and fair value

Under the Consumer Duty and the product governance rules for general insurance, distributors must be able to show that the products they sell, and the remuneration they earn from them, offer fair value to customers. The FC usually produces the remuneration data behind fair value assessments. Our guide to Consumer Duty MI and what finance must produce goes into the detail.

Delegated authority, binders and Lloyd’s coverholders

MGAs and coverholders underwrite on behalf of insurers under binding authority agreements. That brings risk, premium and claims bordereaux, settlement deadlines set by the capacity provider, and reconciliation of what the binder says against what the systems hold. A Lloyd’s coverholder also works within the market’s own coverholder requirements and the oversight of the managing agents that grant its authority, so audits and reviews can come from several directions at once.

Commission and insurance premium tax

Commission recognition is where the sector meets FRS 102 or IFRS 15: when the placement obligation is satisfied, how instalment business and return premiums are treated, whether part of the commission relates to post-placement servicing and should be deferred, and how profit or contingent commission is estimated. Insurance premium tax (IPT) is charged at a standard rate and a higher rate on certain products, and intermediaries that collect premiums need IPT handled correctly on the invoice and through the insurer settlement.

The questions that reach it

1. Explain risk transfer to me in your own words. The single best question in the set, and it takes two minutes. Someone who has genuinely worked in an intermediary explains it as a function of the terms of business agreement and describes both sides. Someone who has read about it describes a definition. Follow up with: how do you satisfy yourself it applies? The answer should involve reading the agreements, not assuming from practice.

2. Walk me through your client money calculation, step by step. Sources, categories, timing, what is included and excluded. Owners describe the awkward parts — unallocated cash, in-flight settlements, mid-term adjustments — without prompting.

3. Statutory or non-statutory trust, and why? Tests whether they understand the working capital and regulatory consequences of the choice, or merely know the terms.

4. Tell me about a client money shortfall or a discrepancy. Anyone who has run this has had one. Strong answers describe identification, quantification, making good, and reporting — not a claim of a perfect record.

5. What did your CASS auditor raise, and what changed? Ownership of findings, and it also confirms they have actually been through a CASS audit rather than only a statutory one.

6. How do you handle unallocated cash? Every broker has some. The answer reveals both process discipline and their relationship with the operational side of the business.

7. When do you recognise commission? Instalments, return premiums, mid-term adjustments, and any profit or contingent commission. This is where the sector meets revenue recognition and where auditors focus.

8. [If MGA or delegated authority] Talk me through your bordereaux reconciliation. Frequency, what is matched, how differences are cleared. Ageing differences are the sector’s recurring failure and an experienced candidate will say so.

9. If you joined on Monday, what would you look at first? Experienced intermediary FCs have a checklist — the risk transfer mapping, the age of unallocated cash, when the calculation was last independently reviewed. The answer reveals depth in ninety seconds.

Further questions on capital, reporting and conduct

10. How does the firm calculate its capital resources, and how much headroom does it carry? A strong answer names the requirement, the deductions and what would erode the headroom — a large PII excess, intangible assets after an acquisition, or a loss-making quarter.

11. Who prepares the RMAR, and how do you check it ties to the ledger? You want to hear about a reconciliation between the return and the management accounts, not a reliance on whatever the reporting template produces.

12. What finance data have you produced for a fair value assessment? Look for commission and fee analysis by product, add-on income, and an understanding of why the board needs it.

For the wider question bank, see our CASS accountant interview questions and breach scenarios and the guide to interview preparation for regulated-firm finance.

Two practical tests worth adding

Give them a real calculation. An anonymised client money calculation and twenty minutes, with the question: what would you check, and what looks wrong? It reveals more than any question set, and candidates who have done this find it interesting rather than intimidating.

And involve your compliance lead in one stage. If you lack CASS expertise on the interview panel, this is the single most effective thing you can do — the same advice applies to any regulated finance hire, as our guide to hiring regulatory experience sets out.

If you build the calculation exercise yourself, seed it with the issues that matter: an insurer recorded as granting risk transfer where the agreement only covers premiums, unallocated receipts older than a few weeks, a client bank account without an acknowledgement letter, and a mid-term adjustment posted to the wrong side.

Red flags

Using CASS 5 and CASS 7 interchangeably. The clearest signal that the experience is from an adjacent regime rather than this one.

Describing risk transfer as a property of the insurer relationship rather than of the written agreement.

Vagueness about the CASS audit from someone claiming to have owned client money — it is an annual event with findings, and anyone who has been through one remembers it.

No example of a discrepancy or breach. Either they have not owned it or they are not being straight.

Treating unallocated cash as an operations problem. It is a client money problem with an operational cause, and an FC who does not own it will let it age.

And a general-practice audit background with no intermediary clients, presented as sector experience.

Specifying the role

Four things that transform the shortlist, and many specifications include none of them.

Name the regime and the model. “CASS 5 client money, non-statutory trust, mixed risk transfer” is a filter that reaches the right pool. “Regulated environment experience” is not.

State whether the role is the CASS oversight function. In smaller firms it frequently is, which is a materially different job carrying personal visibility to the regulator — see CASS oversight versus operations.

Say whether there is delegated authority, because bordereaux and underwriting accounting narrow the pool considerably and price above.

And describe the starting position honestly — the unallocated cash that has aged, the risk transfer mapping nobody has refreshed, the calculation that has never been independently reviewed. Candidates worth hiring read that as the reason the role exists.

If the FC will also hold a senior manager function under SMCR, say so in the specification, because it changes both the pool and the pay. Senior manager appointments such as SMF16 and SMF17 are handled by our sister firm SMF Capital, and finance director or SMF2 searches by FD Capital. Our guide to SMCR for finance teams explains the regime.

When adjacent experience is acceptable

The CASS 5 pool is small, so pragmatism matters. A candidate from CASS 7 or another client money regime is frequently a reasonable appointment where three things hold: they have genuinely owned a reconciliation and a calculation rather than reviewed one; they have been through a client money audit; and there is existing CASS 5 knowledge in the firm or in the adviser relationship to support the first six months.

Where none of that holds — an intermediary with no internal CASS expertise appointing its sole finance resource from a different regime — the risk is real and it is the configuration in which breaches go unnoticed longest. In that situation an interim with CASS 5 experience alongside the permanent appointment for the first quarter is a proportionate answer.

Qualification — ICAEW, ACCA or CIMA — is the baseline and worth verifying; the sector experience is what you are actually buying. For the differences between the investment and insurance regimes, see CASS 7 vs CASS 15 and hiring client money experience.

What an insurance intermediary FC costs

The figures below match our Financial Controller benchmarks for FCA-regulated firms. Pay depends on the size of the client money balance, whether there is delegated authority or Lloyd’s business, and whether the FC also holds a senior manager function.

Intermediaries sit at the lower end of the regulated premium, closing the gap where there is a non-statutory trust, delegated authority or Lloyd’s business. For the reasons behind the premium, see why regulated finance roles pay more; for wider benchmarks, the regulated-firm finance salary guide; and for interim cover, the interim finance rate card.

Frequently asked questions

Does a broker FC need CASS 5 experience specifically?

Ideally, yes. Adjacent client money experience can work where the candidate has genuinely owned a calculation and reconciliation and the firm has CASS 5 support elsewhere, but a sole finance hire from another regime is a real risk.

What is the most revealing single interview question?

Ask the candidate to explain risk transfer and then how they check that it applies. People who have done the job talk about reading terms of business agreements; people who have not give a definition.

Can we hire an interim while we search?

Yes. An interim with CASS 5 experience is a common bridge, particularly ahead of the client money audit, and interim candidates can usually be put forward within days.